Iraq’s parliament, in a bid to lure foreign investors to build new refineries, on Wednesday approved legal amendments to set a 5 percent discount on crude sold to refiners, according to a report from Reuters.
Currently Iraq offers crude to refinery investors at a 1 percent discount to the world price, but the new discount, offered for a 50-year period, would have limits — a minimum of $4 per barrel and a maximum of $8.
The country’s capacity to refine fuels such as diesel and gasoline has been ravaged by under-investment, and Iraq has been forced since the 2003 U.S.-led invasion to buy imported fuels to meet a growing gap between supply and domestic demand.
Parliament also amended the 2007 law governing refiners to allow companies to lease land for refineries for 50 years with the right of renewal.
“These amendments are vital and are to encourage foreign investors to start building and operating their own refineries in Iraq,” said Adnan al-Janabi, head of parliament’s oil and gas committee.
Janabi said the amendments would help remove red tape and roadblocks standing in the way of willing investors.
Iraq does not export any refined oil products, because it uses all of its production for power generation and domestic consumption.