New Oil Refinery announced for Qayara

By John Lee.

Iraq's North Oil Company (NOC) has signed a Heads of Agreement (Memorandum of Understanding) with two energy companies to build a 70,000-barrels-per-day oil refinery in Qayara (Qayyarah).

The facility, Nineveh province, is to be built by Sweden's SEAB and Turkey's Limak.

No information was given regarding the size of the investment or the proposed schedule.

(Source: Ministry of Oil)

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Ministerial Energy Council urges Progress on Refineries

By John Lee.

At the most recent meeting of Iraq's Ministerial Energy Council, headed by Oil Minister Ihsan Abdul-Jabbar Ismail, the Council decided that the South Refineries Company (SRC) should "take the necessary steps" to develop the Shuaiba refinery in Basra Governorate.

It also urged the acceleration of work on the 140,000-bpd Karbala oil refinery, and recommended the study of the final steps for the development and expansion of the Al-Diwaniyah Refinery.

(Source: Ministry of Oil)

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Japan extends $300m Loan for Basra Refinery

By John Lee.

Japan's Minister for Foreign Affairs, Motegi Toshimitsu, visited Iraq on Saturday, meeting with Foreign Minister Fuad Hussein, Prime Minister Mustafa Al-Kadhimi, and President Barham Salih.

Minister Motegi announced that Japan intends to extend the "Basrah Refinery Upgrading Project (Phase 3)" Yen loan project (up to the amount of 32.7 billion yen) [$300 million], and expressed his hopes that this project would contribute to providing the stable supply of energy and to creating jobs in Iraq. In response, Minister Hussein expressed his gratitude.

Minister Motegi added that he appreciates the publication of the "White Paper for Economic and Financial Reforms", and stated that Japan looks to support Iraq's reform efforts together with the international community through the "Iraq Economic Contact Group."

Both sides also exchanged views on measures to prevent the spread of COVID-19 and means to improve the business and investment environment in Iraq.

(Source: Govt of Japan)

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Iraq Doubles Capacity at Salahuddin-2 Refinery

By John Lee.

The Iraqi Ministry of Oil has doubled capacity at its Salahuddin-2 refinery, part of the Baiji complex, from 70,000 barrels per day (bpd) to 140,000 bpd.

Speaking at the opening ceremony on Monday, Oil Minister Ihsan Abdul Jabbar Ismail said he plans to restore capacity at the plant to the 280,000 bpd level at which it was operating before it was damaged by the Islamic State group (IS).

(Source: Iraqi Ministry of Oil)

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Iraqi Refineries: Continued Misalignment amid Investment Illusion

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Refining Industry - Continued Misalignment amid Investment Illusion

More than fifteen years ago a new refinery-specific law was promulgated and then the Ministry of Oil-MoO paid millions of dollars for commissioned international consulting firms to undertake Front End Engineering and Design (FEED) and feasibility studies for a number of new refineries configured to produce petroleum derivatives in compliance with Euro 4/5 standard.

Many tacit objectives stood behind the move: modernize the refining sector to address initially domestic supply-demand misalignment (import substitution) and then export the surplus (export promotion).

All that to introduce a vertical structural diversification along the value-chain of petroleum (desirable structural change) and the new refineries should, mostly, executed through private investment, national or foreign (privatizing the refining industry).

When the FEED and feasibility studies were done, MoO organized promotional events to attract private investors for these new modern refineries and throughout the years many of the refineries went for repeated offering.

At end 2020, none of those refineries materializes despite of the many and high valued incentives and exemptions offered by the related investment laws.  Surprisingly, the Ministry keeps déjà vu; reoffering and offering even more other new refineries for investment without any FEED or feasibility studies.

Recently, I published two-part essay written in Arabic, circulated widely and posted on many websites; the essay undertakes, in part one, comparative Gap Analysis, uses formal data, adheres to evidence-based approach and presents six facts (with Infographic) featuring the reality of the refining sector.

In part two, the essay argues that lack of planning, mismanagement, wrong policy orientation captured by private investment illusion and, possible, formidable "pressure interests" had contributed to this very serious failure of Iraq' oil policy that keeps costing the country dearly, annually. The essay presents some suggestions to remedy the situation.

This article is premised on the findings of the said essay; it also demonstrates that refinery gap manifests chronic local production-demand misalignment as outcome of the technological configuration of the outdated refineries. It calls for careful important distinction between two types of refinery gap analysis: aggregate and product-specific to avoid misleading interpretation and wrong policy recommendations.

The article argues further that private investment illusion-PII causes the country dearly, through dual-capturing effects, due to delay in resolving refinery gap. All charts are based on formal monthly data retrieved from different credible sources and compiled tabulated and produced by this author.

Click here to download the full report in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq's Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

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Iraq Pushes Faw Refinery Project

By John Lee.

The Iraqi Ministry of Oil has invited international companies to participate in the competition to implement the Faw Refinery Project in Basra.

The project will be offered on a BOO (Build, Own, Operate) or BOOT (Build, Own, Operate, Transfer) basis.

Oil Minister Ihsan Abdul Jabbar Ismail said the refinery will be environmentally friendly and in conformity with international standards (EURO 5), adding that a petrochemical complex will be added to the project in the future.

(Source: Ministry of Oil)

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Iraq to Expand Haditha Refinery

By John Lee.

Iraq's Minister of Oil, Ihsan Abdul Jabbar Ismael, has laid the foundation stone for a new 20,000-barrel-per-day production unit at Haditha Refinery, in Anbar province.

The new unit will increase production at the plant to 36,000 barrels per day.

The General Director of the North Refineries Company (NRC), Qassem Abdel Rahman, said the company will invite international companies to add additional capacity of 35,000 bpd.

(Source: Ministry of Oil)

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