Iraq’s ministry of oil, in an effort to boost the country’s refining capacity, has signed an agreement with Karbala Refinery Corp. Ltd. for the construction of a 200,000 b/d refinery in the Karbala region.
"Karbala Refinery will be located 100 km south of Baghdad on a 6 sq km plot of land, and will be the most advanced state-of-the-art refinery with almost [a] full conversion rate and with an estimated cost of $6.5 billion," said KRC Chief Executive Officer Dean Michael.
Analyst Catherine Hunter of IHS Global Insight said the project will be aimed at meeting Iraq’s domestic demand for gasoline and diesel. Numerous regional refining schemes are geared “towards both the transportation sector and, unfortunately, electricity, with gas shortfalls buoying demand for oil products in this sphere.”
The Karbala project is part of Iraq's longer-term plan to construct four new refineries in an effort to add 750,000 b/d of refining capacity. The other three new refineries are to be at Nassiriya, Maysan and Kirkuk.
Meanwhile, the US Trade & Development Agency announced its support for the continued modernization of Iraq’s oil and gas sector with a $502,798 grant to the South Refineries Co for a study on the rehabilitation of Basra refinery.
The study will assess the current condition of the refinery and outline the necessary engineering, equipment supply, and construction efforts required to modernize its operation.
USTDA said the rehabilitation “will allow the country to realize greater economic benefit from its oil reserves, while supporting the Iraq Ministry of Oil's goal to reach a capacity of 12 million b/d production by 2020.”
Meanwhile, China National Petroleum Corp. has started crude oil production from the Al Ahdab oil field in central Iraq.
Iraqi oil officials said output is running at a rate of 40,000 b/d and was expected to reach 60,000 b/d within days.
By yearend, Al Ahdab field, which has reserves of 1 billion bbl, is expected to produce 120,000 b/d, rising to 160,000 b/d by the end of 2012, officials said.
Contact Eric Watkins at [email protected].