Iraq Wants Petrobras to Invest in Refining

Iraq wants Brazilian state-run energy company Petrobras to help the country increase its refining capacity, Iraq's vice prime minister for energy policy, Hussain Al-Shahristani, told Brazilian business daily Valor Economico.

"Companies from China, South Korea and Europe are interested, but we would also like to have Petrobras involved because of its importance."

Dow Jones reports that the country is ramping up oil production, but lacks the refining capacity to produce higher-value oil products such as gasoline and diesel fuel. Iraq, which holds about 143 billion barrels of reserves, wants to build four new refineries to beef up capacity by 750,000 barrels a day.

The first refinery would process about 145,000 barrels a day. Iraq expects to receive initial proposals for the $2 billion refinery project this month, Al-Shahristani said, according to the report.

"If Petrobras accepts, no matter what the size of its participation, we're going to give them a 3% discount on the price of oil."

Given that transport costs to the refinery will be minimal, Al-Shahristani said that profits and margins at the refinery would be "very good."

Petrobras, however, has said that it would move to limit overseas investments as it concentrates on development of recently discovered ultra-deepwater oil fields off the coast of Brazil. The company has also been criticized for its plans to build five new refineries in Brazil as part of its $224 billion investment plan through 2014.

(Source: Dow Jones Newswires)

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