LONDON: Iraq has extended the bid deadline on its first major crude oil prepayment deal to early December after traders were left scrambling to draw up proposals and secure bank lines in a tight 4-day window, sources familiar with the matter said.

Trading sources and an oil ministry official with direct knowledge of oil exports operations said the new deadline was Dec. 4 instead of Nov. 27.

Iraq’s state oil marketer SOMO sent a letter on Monday asking for bids for its first ever crude prepayment starting Jan. 2021 until Dec. 2025. Trading and banking sources said the original deadline was too tight to make coherent bids.

“We decided to extend the deadline to give more space for customers to study our offer and make sure they fully understand contract terms,” the official said.

Sources said that the terms in the original letter were confusing and needed clarification.

A banking source with direct knowledge of the matter said that SOMO’s proposal was a long-term commercial contract lasting until 2025 combined with a one-year prepayment from 2021 to 2022 that could then be renewed.

The source said the prepayment would be worth about $2 billion to be repaid with 48 million barrels of crude.

In the original letter, SOMO said the “general terms” were for a 5-year period with 4 million barrels per month of Basra crude. In a separate section under “prepayment”, the letter said the winner would receive 48 million barrels between July 1, 2021 and June 30, 2022 to repay an unspecified cash advance.

“SOMO has had prepayment discussions for months if not years but the letter was a surprise for everybody. Banks won’t be able to give indications in time (for Nov. 27).—Reuters