Motor Oil Hellas deputy managing director Petros Tzannetakis has disclosed that the petroleum refining company’s utilization of lower crude oil price opportunities prompted a long-term deal with BP for supply of Iraqi Basrah-type crude oil.

In recent times, production levels of mazut at Motor Oil’s refining facilities had increased. This resulted from a company decision to capitalize on opportunities that emerged in the crude oil supply market as a result of intensified competition between producers, which led to significant price reductions, expanding the gap between light and heavy crude oil.

Of course, taking full advantage of lower heavy crude oil prices, such as the Iraqi Basrah-type, requires efficient management of increased mazut quantities.

Light crude oil receives a higher price than heavy crude oil on commodity markets as it yields a higher percentage of petrol and diesel fuel when converted at oil refineries.

Besides its deal with BP, Motor Oil Hellas is currently developing an investment plan to increase its storage capacity with the addition of seven new tanks, two of which are currently being constructed. Besides using the new tanks to increase its capacity, the company also plans to lease the storage facilities to third parties, especially traders.

The company’s exisiting storage facilities are used by the Cyprus Organization for Storage and Management of Oil Stocks (COSMOS), traders, as well as the US Navy fleet. The oil market’s current contango situation, a condition in which the futures price of a commodity is higher than the expected spot price, has increased the demand for storage space.