The oil minister of Iraq has given a statement about being in talks with Italy’s multinational oil and gas company, ENI, to build an oil refinery in the Zubair oil fields, which is to be operated by the Italian company.
The refinery is estimated to produce nearly 300,00 b/d and the project would cost approximately USD 4 billion. The initial phase of this project is set to include the commissioning of 150,000 b/d by the year 2025.
ENI, a multinational oil and gas company, currently operates in the southern parts of Zubair oil field, with nearly 41.56% of shares. The other shareholders include South Korea with 23.75%, state-owned Basra Oil Co. with 29.69%, and another state partner with about 5% shares.
According to the estimates, while considering the current project, the Zubair oil fields are set to produce 700,000 b/d by the year 2027.
Due to the recession caused by the COVID-19 pandemic, the governments around the world have been facing economic troubles. Iraq’s government is, thus, seeking to involve the private sector into the Zubair field project. The government expects the private sector to own about 20% of the project because they do not have the resources to finance the project.
The government is ready to have off-take agreements which will guarantee the sale of products domestically. These products include gasoline, gas oil, and lubricants, which are set to be consumed locally. The by-products created from the refinery are expected to be shipped outside the country.
Meanwhile, OPEC’s second-largest oil producer is importing gasoline and diesel into the country to meet its rising needs. However, OPEC’s refineries are considerably old, dilapidated, and damaged due to the 2013-2017 war against the Islamic State.
Meanwhile, the refineries already present in the Zubair oil fields are planning to expand their production facilities.
North Refineries Co. is preparing to increase its processing capacity to 120,000 b/d by the end of this year, which is at 75,000 b/d at present.
The government also plans to expand the capacity of the Sumood Refinery in Baiji, north of Baghdad, to produce 280,000 b/d.
The capacity is expected to reach 140,000 b/d in the upcoming months, which was earlier at 75,000 b/d.
The Baiji Complex, which involves the Sumood Refinery, was extensively damaged due to the bombardments, siege, and intense fighting between the Islamic State and federal security forces during mid-2014 and the end of 2016.
The Iraqi government has also approved the contract with Japan’s JGC Corp to upgrade the Basrah refinery. The contract is estimated to be around USD 4 billion. The Basrah refinery has the capacity to produce 210,000 b/d, and the work is expected to be in progress by next year and terminates in the next four. The deal was announced on 29th July 2020.
Japan’s EPC and O&M service provider, on August 3rd 2020, issued a statement regarding the construction at the Basrah refinery. The upgrades being made include a vacuum distillation unit, a fluid catalytic cracking unit, and a diesel desulfurization unit, among others. The project is likely to increase the production capacity of gasoline to 19,000 b/d and diesel to 36,000 b/d.