By Ammar Karim (AFP) – Jun 26, 2010
BAGHDAD — Oil Minister Hussein al-Shahristani said on Saturday that Iraq is seeking around 20 billion dollars to build four new refineries as it seeks to become a net exporter of petroleum products.
"The investment in the new refineries will be around 20 billion dollars. Each one will cost around five billion dollars," he told reporters at a conference attended by global energy and construction giants interested in bidding for the contracts.
Iraq aims to boost its refining capacity by 740,000 barrels per day (bpd) on top of the current 550,000 bpd through construction of the four refineries in the central province of Karbala, in the northern oil hub of Kirkuk and in Nasiriyah and Maysan in the south of the country.
"The investment will not be constrained -- we are looking for real partners and in any ratio," Shahristani said.
"Any investor can invest in full or in partnership with Iraq," he added.
"The investor will receive a discount of five percent on the price of crude compared to international prices, as there will be tax breaks, land provided and transport as well.
"We welcome any investor to join us under the design that is developed," he added, referring to feasibility and design contracts that Iraq has already begun awarding.
The Iraqi parliament adopted legislation in 2007 allowing for full foreign ownership of refineries, breaking the stranglehold of the state over the oil sector under now executed dictator Saddam Hussein's regime.
The Karbala refinery is intended to have a capacity of 140,000 bpd, the Nasiriyah refinery 300,000 bpd, and the Maysan and Kirkuk plants 150,000 bpd each.
"There is a priority for construction of a refinery in Karbala as it is in the centre of Iraq and the inputs can be transferred to it from the south and north, followed by Maysan, Kirkuk and then Nasiriyah," said Iraq's deputy minister for refining, Ahmed al-Shamma.
"It is expected that some of the production from the Maysan, Kirkuk and Nasiriyah refineries will be surplus to domestic needs, but that will be reduced with the increase in demand over time," Shamma said.
"These refineries will meet future needs for the next two decades."
Iraq currently has three refineries in Baiji in the north, Basra in the south, and Dora in southern Baghdad.
They have a combined capacity to handle 550,000 bpd of crude, producing refined products including 12 million litres of petrol, 15 million litres of diesel, nine million litres of heating oil and large volumes of fuel oil for power stations.
But the combined effect of years of UN sanctions against Saddam's regime and the US-led invasion of 2003 and its violent aftermath have meant that they are in need of refurbishment and Iraq also has plans to upgrade them.
The head of the oil ministry's investment committee, Sami al-Aaraji, said that in total "the amount likely to be invested in refineries is 25 billion dollars."
Iraq has ambitious plans to boost its crude output from the current 2.5 million bpd to as much as 12 million bpd over the next six years and has awarded a series of deals to oil majors to develop major new fields.
"Iraq during the next six years will become the biggest producer and exporter of crude as well as a major exporter of refined products," Shahristani said in a challenge to the current oil kingpins Russia and Saudi Arabia.
Currently Iraq struggles to meet domestic demand for refined products and has no spare production for export.
It exports crude from its northern oil fields around Kirkuk by pipeline to the Mediterranean through Turkey and from its southern oil fields around Basra by tanker through the Gulf.
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