Engineering News

Iraq: Two New Refinery Deals Close
Thursday, July 10, 2008

Iraq's Oil Ministry said Thursday that it is close to signing contracts to build two new oil refineries in southern Iraq.

The ministry is expected to sign one contract for a 300,000 barrel-per-day refinery in Nasiriyah province by the end of July or early August, a senior oil official said.

The official said the ministry was studying proposals presented by international companies to build another 150,000-barrel-per-day refinery in Karbala. The official, who declined to name the companies, spoke on condition of anonymity because he is not authorized to make statements.

"There is no doubt that we will offer these contracts to well-known international companies in this field," the official said. He said the refineries would meet increasing need for oil products in central and southern Iraq and lead to a reduction in imports.

Nasiriyah is about 320 kilometers (200 miles) south of Baghdad, while Karbala about 80 kilometers (50 miles) south of the capital.

Iraq has the world's third-largest known crude oil reserves, with an estimated 115 billion barrels, but it suffers acute shortages in petroleum refined products as most infrastructure was damaged or destroyed after years of U.N. sanctions and war.

Iraq's three main oil refineries are running at roughly half the 700,000 barrels daily capacity they maintained before the U.S.-led invasion in March 2003.

In 2006, the ministry built a refinery in Najaf, about 160 kilometers (100 miles) south of Baghdad. It has a refining capacity of about 20,000 barrels per day.

Last March, the ministry declared a US$85 million deal with the Colorado Industrial Construction Services Co. to help expand the refinery by 10,000 barrels per day.

The shortfall has forced Iraq to turn to imports from neighboring Iran, Kuwait and Turkey.

The country has been forced to import around 8,000 tons each day, or about 60,000 barrels, according to figures released early this year by the State Oil Marketing Organization.

Insurgents have attacked pipelines, hoping to rob the government of oil revenue. The number of attacks has dropped sharply since last year.

Source: AFX News Limited

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