SINGAPORE, Sept 20 (Reuters) - Iraq's SOMO has sold

500,000 barrels of Qaiyarah crude to U.S. refiner Valero Energy ( VLO )

, out of the 2 million barrels it offered via a tender on

the S&P Platts Market on Close process late on Thursday, trade

sources said.

Iraq's offer of prompt-loading Qaiyarah crude comes at a

time when Asian buyers have already completed their purchases

for October loading, and after China stepped up imports of

similar quality heavy and high-sulphur oil from Canada following

the expansion of the Trans Mountain pipeline that has shortened

the distance for shipments from Canada to North Asia.

The cargo to load on Oct. 8-10 was sold at a discount of

$28.30 a barrel to the average of Platts Oman and Dubai quotes

on a free on board basis from New Dynasty, the sources said.

New Dynasty is a very large crude carrier that is used as

floating storage at Khor al Zubair.

There is still 1.5 million barrels of Qaiyarah crude left

unsold, one of the sources said.