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Iraq signs deal with Boskalis that could almost double oil exports capacity

Amman, Jordan — Iraq signed a heads of agreement with Dutch firm Boskalis to build an artificial island south of the Abot tanker terminal in the Persian Gulf to almost double its export capacity and increase storage room in three years.

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Export capacity would be expanded by 3 million b/d and storage capacity by 6 million barrels, the Iraq oil ministry said Monday in a statement on its website after the agreement was signed by Iraq and Boskalis.

Gulf capacity is currently 3.6 million b/d for exports and 10 million barrels for storage. The Council of Ministers, Iraq's executive branch, approved the project in June, oil minister Thamir Ghadhban said in the statement. Terms were not disclosed. The ministry calls it "Industrial Island."

In 2016, the project was estimated to cost $2.25 billion, according to a Boskalis document seen by S&P Global Platts. The project includes building housing for 300 people on an island located 4 nautical miles south of the Abot terminal.

An export terminal would be attached to the island, and include 4 jetties and export capacity of 3 million b/d. The jetties would have loading facilities for up to four VLCC vessels at a time, each capable of holding up to 320,000 DWT.

The onshore FAO terminal at the tip of the Persian Gulf would be expanded to have 6 million barrels of new capacity to receive light and heavy oil that could be pumped to the new island for export. The island would be linked to FAO by two new pipelines.

Iraqi oil sources say there is support within the oil ministry to move ahead with the project to better take advantage of export opportunities; it is estimated that some 400,000 b/d of crude currently can't be exported from existing facilities at any one time due to a lack of capacity.

Some 85% of Iraq's exports are shipped through Gulf terminals including Abot, KAA terminal and 4 single point moorings. The Abot terminal accounts for about 1.8 million b/d of Gulf exports from four fixed jetties, and another 1.8 million b/d comes from the 4 SPMs. In August, Iraq's Gulf exports came to 3.5 million barrels, according to data compiled by Platts.

--Faleh Al-Khayat, newsdesk@spglobal.com

--Edited by Claudia Carpenter, claudia.carpenter@spglobal.com