Iraq Woos Refinery Investment as Port Systems Crumble

Source:

". . .Iraq will allow investors to set prices for refined products."

Iraq, seeking to double its domestic refining capacity and reduce expensive imports, offered discounted oil and acreage to companies willing to invest $20 billion on four refineries.

". . .Each one will cost around $5 billion," said Iraq's Oil Minister Hussain al-Shahristani, referring to facilities at Karbala, Kirkuk, Maysan and Nassiriyah.

"Refinery investments in Iraq are guaranteed more than anywhere else in the world," said al-Shahristani, adding his country "wants real partners, at any percentage."

al-Shahristani said Iraq will allow investors to set prices for refined products, as well as offering a 5% discount on the price of oil used and land to build the refineries.

The need for improvement is underlined by the U.S. EIA, which said, "Iraqi refineries, with a total capacity of almost 600,000 b/d, have antiquated infrastructure, and their output does not reflect the current demand mix."

EIA said despite improvements in recent years, the sector has been unable to meet domestic demand for most refined products, and the refineries produce "too much heavy fuel oil."

The result is that Iraq relies on imports for about 25% of the petroleum products it uses, with total petroleum product consumption averaging about 600,000 b/d in 2008.

"To alleviate product shortages, Iraq's 10-year strategic plan for 200817 set a goal of increasing refining capacity from 600,000 b/d to 1.5 million b/d," according to the EIA.

According to EIA, the Iraqi government actually wants to construct five new refineries at Baghdad (100,000 b/d), Kirkuk (150,000 b/d), Maysan (150,000 b/d), Karbala (150,000 b/d) and Nassirayh (300,000 b/d) in an effort to add capacity of 850,000 b/d to the country's current output.

The country has recently made several awards in connection with the development of its new refineries.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe