INTERVIEW: Iraq aims to boost its refining capacity by a third by Q1 2022: Deputy oil minister

Dubai — Iraq is forging ahead with plans to boost its refining capacity by about a third by the first quarter of 2022 to reduce dependence on imports of gasoline and gas oil, deputy oil minister told S&P Global Platts Sept. 17.

Iraq, which has a current refining capacity of 640,000 b/d and design capacity of 700,000 b/d, plans to add about 210,000 b/d of refining capacity by the first quarter of 2022 and boost the quality of processed products to generate more gasoline and gasoil, Hamed al-Zobai said.

"The ministry's master-plan for refineries is to develop refineries along two parallel lines: first to increase the efficiency of current refineries to improve the quality of products and boost their quantity and the second line is to build new refineries," al-Zobai said.

Iraq's refineries are either old, dilapidated or were damaged in the 2013-2017 war with the Islamic State, forcing OPEC's second-largest oil producer to import more gasoline and gas oil. However, imports of crude products have dropped this year due to the COVID-19 pandemic, Zobai said.

Baiji complex

The ministry plans to rehabilitate and develop the Baiji complex north of Baghdad, where three refineries were damaged during the war with the Islamic State. Currently one refinery is operating at 70,000 b/d, a second 70,000 b/d unit will come online by the year-end and a third 140,000 b/d facility should be operational in the next two years. The third refinery will be bringing total capacity at the Baiji complex back to 280,000 b/d, making it again the largest facility in the country.

A new 140,000 b/d refinery in Karbala is also expected to come online in the first quarter of 2022. Plans are also underway to build a new 70,000 b/d refinery in Qayara, near the Qayara oil field in the north. The ministry plans to finance these refining projects from existing budgets, the deputy minister said.

Besides these projects, the ministry is seeking to encourage investors to finance "investment refineries," in several locations, including Zubair and Fao in the south, the deputy minister added.

To woo investors, the ministry is seeking to introduce amendments to an investment law and refer it to government and then to Parliament for approval, he said.

Basrah refinery

Oil minister Ihsan Ismaael announced on July 29 that the Iraqi Cabinet had approved awarding Japan's JGC Corporation a $4 billion contract to upgrade the Basrah refinery, which has a capacity to process 210,000 b/d. It is expected that upgrade work would start next year and last for four years.

JGC said on Aug. 13 the upgrade includes constructing a fluid catalytic cracking unit, a vacuum distillation unit, a diesel desulfurization unit among others. The project will increase production of gasoline to 19,000 b/d and diesel to 36,000 b/d.

Iraq lowered its crude oil output in August to 3.578 million b/d, official figures showed Sept. 10, but remained above the 3.404 million b/d it had pledged to hold production to under the OPEC + supply accord.

Iraq's quota under the OPEC+ pact from August through the end of the year is 3.804 million b/d, but to make up for its excess production in previous months, Iraq had pledged to implement an additional "compensation" cut that would put its effective quota at 3.404 million b/d for August and September.

Ismaael has said he plans to ask a key OPEC + monitoring committee co-chaired by Saudi Arabia and Russia for an extension on its compensation cuts when it meets online Sept. 17.