Page 9 - DMEA Week 33

DMEA REFINING DMEA

JGC to upgrade, expand Basra refinery

MIDDLE EAST JAPAN’S JGC announced last week that it had “positioned as spearheading the modernisation
been awarded a $3.75bn contract to build new and sophistication of Iraq’s oil refining sector”.
refining facilities on land adjacent to the existing The modernisation of the sector has often
210,000 barrel per day (bpd) Shuaiba refinery been proclaimed in recent years, though there
outside Basra in southern Iraq. have been few signed of tangible progress.
In a press release, JGC said that it had received In January 2018, a deal was signed by the
a lump sum engineering, procurement, con- MOO with two Chinese state-owned heav-
struction and commissioning (EPCC) contract yweights – China North Industries Group
covering a 34,500 bpd fluid catalytic cracking (Norinco) and PowerChina – to develop a
(FCC) unit, a 55,000 bpd vacuum distillation 300,000 bpd export refinery on the Fao Penin-
unit and a 40,000 bpd diesel desulphurisation sula, near Basra, though little has been heard of
unit. The deal signed with South Refineries Co. proceedings since.
(SRC) is part of the Ministry of Oil’s (MOO) Work to rehabilitate and expand existing
Basrah Refinery Upgrading Project and is due downstream plants has also achieved some
for completion in 2025, increasing production recent milestones – notably the restart in Sep-
of gasoline and diesel to 19,000 bpd and 36,000 tember that year of the first 70,000 bpd unit at
bpd respectively. the Baiji refinery on the Baghdad-Mosul road,
In an official statement, SRC general man- once the country’s largest at 310,000 bpd but
ager Hussam Wali said that the upgraded facility severely damaged during the Daesh invasion
would “convert the wastes of refinery production and occupation.
from fuel oil to white derivatives (liquid gas, gas- In early 2019, the MoO announced that
oline with a number of octane 92.2, gasoil, mixed capacity at the Basra refinery had been expanded
naphtha, fuel oil, gasoil in hydrogenation units) by 70,000 bpd to 210,000 bpd, adding that work
with European specifications.” was underway to increase potential throughput
Meanwhile, the existing refinery is undergo- to 300,000 bpd.
ing expansion work to raise capacity to 280,000 Adding to this confusion was a government
bpd, with the addition of a fourth 70,000 bpd statement saying that the total construction cost
crude distillation unit (CDU). for the refineries was $3bn, then noting that the
When work was suspended in March because cost of rehabilitation would be much lower.
of the coronavirus COVID-19 pandemic, the Clearly this is not consistent with industry
installation of the CDU, an LPG unit, a water costing, and the lack of consistency which has
treatment unit and an additional boiler is under- long plagued Iraq’s downstream.
stood to have been at an advanced stage. However, given that funding for JGC’s pro-
JGC’s contract expands the role of Japanese ject will be provided by the Japan International
companies in the Basra facility, with Idemitsu Cooperation Agency (JICA) and follows a mid-
Oil & Gas and Toyo Engineering having been 2019 agreement with Iraq’s Ministry of Finance
involved in developing the original refinery. for a $1bn loan to upgrade the refinery, this pro-
In its statement, JGC said that the project was ject is the most promising yet.™

Week 33 20•August•2020 www. NEWSBASE .com P9