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Analysis - Baghdad plans refinery spree

16 Apr 2010 18:10 (+01:00 GMT)
Analysis - Baghdad plans refinery spree

London, 16 April (Argus) — Iraq is drawing up plans to expand its effective refining capacity by 150pc to 1.2mn b/d at a cost of $10.5bn.

The additional 740,000 b/d of capacity will come from four planned refineries (see table). A fifth planned refinery with a capacity of 100,000 b/d close to the 800mn bl East Baghdad heavy oil field is on the back burner because the field was not awarded to a foreign oil company in Iraq's second bidding round in December.

Cash-strapped Iraq will be unable to fund its planned downstream expansion alone and will seek private-sector investors. “We are open to discussing any type of investment. These can be joint ventures, build-operate-transfer agreements, build-own-operate agreements, or engineering contracts with deferred payment,” Iraq's deputy oil minister for refining and gas processing Ahmad al-Shamma told Argus.

Just the one
If refinery projects attract no acceptable investors, Iraq will focus on building one refinery itself to meet rising local demand, and continue to search for investors for the others. Iraq's delayed downstream capacity expansion was originally scheduled for 2015.

The most advanced plans are for the refinery at Karbala, where initial engineering work is under way. The plant will be supplied with Basrah Light crude by pipeline. Once design work at the three other planned plants is completed next year, Iraq's oil ministry will set up a bidding process for selected European and Japanese companies, and invite investors to participate.

Iraq's outdated refining system has nameplate capacity of 600,000 b/d, but throughputs are no more than 450,000-475,000 b/d. The Baiji refinery, which is supplied by Kirkuk crude, is processing 210,000 b/d. Daura, supplied with Kirkuk and Basrah crude by pipeline and truck, runs 70,000 b/d, while Basrah processes 130,000 b/d.

Simple regional refineries include 20,000 b/d units at Najaf and Samawa, and a 25,000 b/d plant at Nasiriya. Use of these regional refineries is a “temporary measure” that will not be needed once new refineries are built, al-Shamma said.

Iraq's refineries are unable to produce enough gasoline to meet domestic demand, and the country imports 5mn-6mn litres/d (30,000-40,000 b/d). They produce excess fuel oil, which Iraq blends with Kirkuk and Basrah Light crude, forcing state-owned oil marketer Somo to pay compensation to buyers for providing heavier crude.

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Iraq’s planned refineries

 

 

 

Capacity ('000 b/d)

Cost ($bn)

Nasiriya

300

4.5

Karbala

140

2.0

Missan

150

2.0

Kirkuk

150

2.0

Total

740

10.5

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