Iraq to build oil refinery in Fao with Chinese firms

BAGHDAD / Reuters

Iraq plans to build an oil refinery at the port of Fao on the Gulf with two Chinese companies, and is seeking investors to build three more, the oil ministry said on its website on Monday. The refinery in Fao will have a 300,000 barrel-per-day capacity and include a petrochemical plant, it said.
Two other refineries, each with a 150,000-bpd capacity, are planned in Nasiriya, southern Iraq, and in the western Anbar province. A third, with a 100,000-bpd capacity, is planned in Qayara, near Mosul, the northern Iraqi city, which was taken back from IS militants last year. Iraq is OPEC’s second-largest oil producer, after Saudi Arabia. Its refining capacity was curtailed when IS overran its largest oil processing plant in Baiji, north of Baghdad, in 2014.
Iraqi forces recaptured Baiji in 2015, but the place sustained heavy damage in the fighting. The country now relies on the Doura refinery, in Baghdad, and Shuaiba plant, in the south. Work to rehabilitate Baiji has begun, Oil minister Jabar al-Luaibi said on Monday, adding that a 70,000 bpd processing unit should be brought back on line in six to nine months. A second 70,000 bpd unit in Baiji should follow, he said in a statement. Baiji was processing around 175,000 bpd when it fell into the hands of IS.

SOMO’S EXPORTS
Crude oil exports by Iraq state-oil marketer SOMO ran at an average rate of 3.5 million barrels per day in January, an Iraqi oil official said on Monday in Baghdad. With two more days left in January, the average of the month could top December’s 3.535 million bpd record, SOMO’s acting director general Alaa al-Yasiri told reporters.
“SOMO’s recent export rate increase is not due to higher production, but to a drop in local consumption,” he said. Exports could increase further as Iraq plans to start exports next week from the northern Kirkuk oilfield to Iran, using tanker trucks, he said.
Trucking crude to Iran’s Kermanshah refinery will come under a swap agreement announced last month by the two countries to allow a resumption of oil exports from Kirkuk. Iraq and Iran have agreed to swap up to 60,000 barrels per day of crude produced from Kirkuk for Iranian oil to be delivered to southern Iraq.
Kirkuk crude sales have been halted since Iraqi forces took back control of the fields from the Kurds in October. Kurdish forces took control of Kirkuk in 2014, when the Iraqi army collapsed in the face of IS. The Kurdish move prevented the militants from seizing the region’s oilfields.
Iraq and Iran are also planning to build a pipeline to carry the oil from Kirkuk to avoid having to truck the crude, Luaibi said last month. The planned pipeline could replace the existing export route from Kirkuk via Turkey and the Mediterranean.