Najaf refinery gets 3rd production unit in Iraq

BAGHDAD - Iraq’s Oil Ministry has opened a third production unit at a refinery south of Baghdad, bringing the complex’s refining capacity to 30,000 barrels per day, a spokesman said on Sunday.

By (AP)

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Published: Sun 16 Aug 2009, 6:01 PM

Last updated: Wed 24 May 2023, 3:22 PM

Assem Jihad also announced plans to invite foreign oil companies to develop two oil fields in southern Iraq in a frame of service contracts.

The Najaf refinery’s new 10,000-barrels unit, which was inaugurated Saturday, will help meet the demand for petroleum products such as kerosene and heating oil amid shortages in central and southern Iraq, Jihad said.

Iraq has refining capacity of over 400,000 barrels per day, but still needs to import another 60,000 barrels of refined product a year according to the State Oil Marketing Organization statistics that released last year.

The refinery, about 100 miles (160 kilometers) south of Baghdad was built in October 2006 as part of a plan to build small refineries to curtail the shortfall in petroleum products that has forced Iraq since the 2003 U.S.-led invasion to turn to imports from neighboring countries.

Iraq sits on the world’s third-largest known oil reserves with an estimated 115 billion barrels, but its production is far below its potential due to decades of war, U.N. sanctions, lack of foreign investment and insurgent attacks.

The country’s three main oil refineries — Dora, Shuaiba and Beiji — are processing slightly over half of the 700,000 barrels per day capacity they had before the March 2003 U.S. invasion.

The Oil Ministry also plans to invite foreign companies to develop two southern oil fields — Rafidain in Nasiriyah province and Tuba in Basra province.

“The development studies for these two fields have been completed and invitations will be extended soon,” he told The Associated Press in a telephone interview. He did not give a specific time frame.

The proposed contract will be for Engineering, Procurement and Construction services, known as EPC, by which developers are paid a flat fee for their services, he said.

According to the Oil Ministry figures, each field has the potential to produce up to 100,000 barrels per day.

The ministry is already negotiating with foreign companies to develop two other southern fields under EPC contracts — Nasiriyah with Italy’s Eni SpA, Spain’s Repsol and Japan’s Nippon Oil and Nahr bin Umar oil field with France’s Total SA, Chevron Corp. of the United States and Norway’s StatoilHydro ASA.

Jihad said he expected the Nasiriyah field negotiations to be wrapped up this month.

Iraq’s daily production ranges between 2.3 million to 2.4 million barrels a day. Exports in the second quarter of this year jumped to an average 1.885 million barrels a day, from about 1.8 million barrels in the first quarter.

Revenues in the first half of this year stood at about $16 billion.

The country hopes to add 300,000 to 500,000 barrels per day by the end of 2010 through an emergency plan started early this year to drill new wells and install production surface plants in a number of its oil fields in southern Iraq.

The overall fall of oil prices since last year has forced the government to slash spending plans for this year from $79 billion to $58.6 billion. The oil sector represents about 65 percent of gross domestic product and its revenues account for 95 percent of Iraq’s earnings.

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