Baghdad is set to make awards for two engineering contracts covering the construction of oil refineries at Nasiriyah and Karbala, as it seeks to increase its refining capacity and reduce its dependence on importing refined products.
The two multi-billion-dollar projects cover the construction of a 300,000-barrel-a-day (b/d) refinery at Nasiriyah, 300 kilometres south of Baghdad, and a plant with a capacity of about 150,000 b/d at Karbala, about 50km south of the capital.
According to sources close to the projects, at least two international engineering firms, Australia’s WorleyParsons and the US’ FosterWheeler, have submitted proposals for the 12-month front-end engineering and design (FEED) contract on the Nasiriyah scheme, with an award due in the near future.
An award on a similar deal covering the Karbala FEED is not as advanced, but at least three international contractors are understood to be competing for the contract.
Once the FEED on both schemes has been completed, the client on the two projects, the Oil Ministry, will issue tenders for the engineering, procurement and construction (EPC) elements.
Both projects should be completed by 2012.
The two deals are not the only refinery projects under way in Iraq. The Czech Republic’s Prokop Engineering, together with its compatriot Technoexport, has a deal to upgrade the 150,000-b/d Basra refinery for South Refineries Company (SOC). Under the terms of the deal, the group will install a crude distillation unit with a capacity of 70,000 b/d and a liquefied petroleum gas plant.
The project should be completed by 2011.
The Prokop/Technoexport team is also carrying out a FEED/EPC contract for Midland Refin-eries Company to upgrade the Daura refinery, close to Baghdad. That project will increase capacity at the 110,000-b/d facility by 70,000 b/d. The work is almost complete and the scheme is due
to come on stream by the end of the year.
Iraq’s four refineries, at Daura, Basra and the twin facilities at Baiji in the north, have a nameplate refining capacity of just under 600,000 b/d, while demand stands at about 570,000 b/d, according to the US’ Energy Information Administration (EIA).
However, years of sanctions and terrorist attacks, along with the antiquated equipment at the refineries, means that the facilities are not able to operate at their full capacities.
As a result, Baghdad has to spend some of its much-needed revenues on importing as much as 60,000 b/d of refined products.
The construction of refining facilities should make the country self sufficient and even allow it to export refined crude.
Other refinery projects planned by Baghdad include facilities in Kurdistan, Dohuk, Amarah and Koya. They will be carried out both by the government and private-sector investors, although given the general security situation in the country, it is unclear if all the projects will go ahead.