Iraq Seeks Refinery Investors

Iraq's Deputy Oil Minister, Ahmed al-Shamma, said the country wants to gradually privatise its oil refineries and to attract investment in new plants.

"We would like to see the private sector increase its role ... You shouldn't have the ministry of trade buying and selling commodities; it's out of date .., We are looking to complete renovation of old refineries and privatise them gradually. That's the ultimate goal."

Demand for fuel is growing fast, with gasoline demand now exceeding 20 million litres per day, and gasoil above 22 million litres per day.

"Domestic demand is increasing rapidly. People are driving around at midnight, when a few years ago there was an effective curfew at 6 p.m," Shamma said. "There has been a very sharp increase, but it will taper off."

Iraq's three main refineries -- Baiji (pictured), Daura and Basra -- had a combined capacity of 567,000 bpd at the end of December, the minister said.

Through improvements at the existing sites, and a pipeline from Rumaila to Daura, Iraq aims to increase capacity to 610,000 bpd by the end of 2012, he said. Its target for next year is 750,000 bpd.

Over time, four proposed plants would add about another 750,000 bpd: Kerbala, Missan [Maysan] and Kirkuk, each with a capacity of about 150,000 bpd, and Nassiriya, with a capacity of 300,000 bpd.

Of those four, Iraqi officials previously said Nassiriya would be the lowest priority, because it is designed to run on crude from the Nassiriya oilfield, which has yet to be developed.

Crude would be supplied by the ministry at a discount of 5 percent, and investors would benefit from a 10-year tax holiday. Land for the refineries has already been allocated, and the government will build pipelines to the plants and provide road tankers.

The government recognises that it might have to participate in the projects itself but does not want a stake of more than 25 percent.

(Sources: Reuters, Argus Media)

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