Page 4 - DMEA Week 44

DMEA Commentary DMEA
Iraq moving forward
with refinery projects
as unrest hits sector
Baghdad has committed to building out Iraq’s downstream sector, with incremental gains seen at several refineries, while civil unrest has started to make its impact felt on the oil sector.
middle east
What:
The undersecretary to Iraq’s Ministry of Oil has announced that plans are afoot to increase Iraqi oil refining capacity to 1mn bpd, with the greatest rise seen coming at the Karbala refinery, which remains under development.
Why:
Despite being home
to some of the world’s largest oil reserves, Iraq’s downstream sector is underdeveloped and requires significant investment.
What next:
Improving fuel supply securityistheleastof the Iraqi government’s problems at the moment as protests are starting to reduce oil production, cutting off Baghdad’s lifeblood.
IRaq’s Ministry of Oil (MoO) undersecretary Hamid al-Zawbaei said this week that Baghdad intends to proceed with projects that will add 200,000 barrels per day of refining capacity to the current nameplate throughput of 800,000 bpd.
He told the official daily alsabah that the increase would come from the expansion exist- ing refineries and a new refining unit at the facil- ity in Karbala, which has a design capacity of nearly 200,000 bpd.
al-Zawbaei said that the Karbala refinery was 78% complete, with full commissioning antici- pated in late 2021.
He said: “Iraq’s refineries currently produce around 800,000 bpd but we have chalked out a plan update some refineries and build new units with the aim of reaching one million bpd ... we hope to add 200,000 bpd in the next few years when Karbala refinery becomes operational and expansions are completed,” he said.
Plans to develop a greenfield refinery at Karbala have been on the drawing board since 2007, when Baghdad launched a downstream development programme comprising four new plants across the country. Three of these were to have capacities of 140,000-150,000 bpd, with a 300,000bpdfacilityplannedatNasiriyahaswell.
Karbala is the only one of the original projects to have reached the construction phase follow- ing the MoO’s reversion to an engineering, pro- curement and construction (EPC) contract and its award to a south Korean consortium led by Hyundai Engineering & Construction in 2014. The plant remains unfinished more than five years later.
Meanwhile, a consortium of two Chinese state firms signed up in april last year to develop a 300,000-bpd export refinery on Basra’s al Fao peninsula.
Work to rehabilitate and expand existing downstream plants has also achieved some recent milestones – notably the restart in
september of the first 70,000-bpd unit at the Baiji refinery on the Baghdad-Mosul road, once the country’s largest at 310,000 bpd but severely damaged during the Is invasion and occupation.
On January 28, the MoO announced that capacity at the Basra refinery had been expanded by 70,000 bpd to 210,000 bpd, adding that work was under way to increase potential throughput to 300,000 bpd.
Unrest spreads
Meanwhile, oil workers have reportedly joined anti-government rallies in a first sign that the sector could become embroiled in the ongoing unrest. While oil sites have not yet been targeted by efforts to bring down the government, con- cern is growing that this could be on the horizon.
In late October IsIs forces attacked check- points at alas oilfield in salahuddin Province, killing two security workers and injuring three.
Reuters quoted a statement from the Iraqi army as saying: “Elements of the terrorist Daesh gangs attacked two security checkpoints in the alas oilfields area of salahuddin Province, and an improvised explosive device blew up a vehi- cle belonging to security forces stationed there, leadingtothemartyrdomoftwoofthem.”
The widespread protests made their first impact on oil production this week, with output reported to have been shut in at the qayarah oilfield
a story by Iraq Oil Report quoted officials from state-run North Oil Co. (NOC), which oversees qayarah, as saying that its 30,000 bpd production had been taken offline for several days because “road blockades in Basra are pre- venting tanker trucks from bringing crude to the Khor al-Zubair port”.
These issues have also started to take their toll on the downstream sector, with security forces telling Reuters on Wednesday that the entrance to the Nassiriya refinery had been blocked by
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w w w . N E W S B A S E . c o m Week 44 07•November•2019