Oil minister Hussain al-Shahristani announced plans in July to build a large oil refinery in the western part of Iraqi Kurdistan. The new 250,000 b/d facility at Kou Zenjaq will be constructed by a hitherto little-known Lebanese company, Make Oil, underlining the strength of economic ties between Beirut and Erbil. The three-year project is expected to cost about $1 billion.
Make Oil is already constructing a cement works in the northern Kurdish town of Dohuk, near the Turkish border. In early July, the Ministry of Oil started mulling technical bids for a proposed 300,000 b/d grassroots crude oil refinery near Nasiriyah in the south. Nine companies submitted technical and commercial bids for the four-month contract. Commercial bids will be studied in late August,ahead of a full contract award in the third quarter of 2006.
The bidding group comprises the big guns of the IOC and engineering worlds BP and Royal Dutch/Shell, together with Australia's WorleyParsons, France's Technip, Japan's Mitsui & Company and the US foursome of Foster Wheeler, Fluor Corporation, Kellogg Brown & Root and Stone & Webster. The estimated $2 billion facility will comprise two trains and will be able to process 300,000 b/d of Basra light or Mishrif crude. The refinery will produce gasoline, kerosene, gas oil, liquefied petroleum gas and fuel oil. The plan is to involve the private sector on a build-own-operate (BOT) basis.
Iraq's nameplate refining capacity exceeds 700,000 b/d, but the combined effects of sanctions, under-investment and age means that the sector is only operating at 50-70% capacity. Refining capacity was 597,500 b/d as of 1 January. Iraq is forced to import around 200,000 b/d of refined products, at a cost of $200 million-250 million a month. Overall, Iraq has eight refineries, none of which were damaged during the 2003 conflict. The three largest refineries are the 310,000 b/d Baiji, 150,000 b/d Basra, and 110,000 b/d Dora plants.
Two companies the US' Hydrocarbon Supply and Prokop of the Czech Republic are upgrading Dora at a cost of $110 million. Capacity at the plant is to be increased to 170,000 b/d. A new oil refinery is also planned in Basra, with a capacity of 250,000-300,000 b/d, with a shortlist of eight companies in the running to build it.
The current issue of IRAQ FOCUS also includes the following
Leadership and policy
Baghdad divides as Iraq's sects battle for the capital
Mahdi militia singled out
Americans get tough with Sadrists
Meliki falls at the first hurdle
Politics and security
UK, US differ over basing issues
Maliki breaks ranks over Lebanon
Cooler heads still prevail as Kurds seek to cement gains
The 'Compact' and Kurdish foreign policy
ICG formula for stability in Kirkuk
Saddam trial update
Oil industry
Kirkuk splutters into life, but Iraq can't depend on its northern artery
Iraq progresses refineries
Lukoil sits tight on West Qurna development
Business environment
Washington presses UN on Iraq compact
Watchdog warns on reconstruction costs
Reconstruction finance: counting the costs
US pact seeks to revitalise private sector
Kurds pass new investment law
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