Baghdad is preparing to announce a new investment model for Iraq refinery projects, according to Oil Minister Thamer Ghadhban.

Speaking at the Iraq Petroleum conference in London, Ghadban said that domestic demand for refined products was growing.

“Over the last few years, we were importing gasoline and gasoil in large quantities at high cost to the treasury,” he said.

“Building an attractive investment model for new refineries has been less than satisfactory and the Ministry of Oil has started working on alternative models.

“A new investment model with more incentive to investors shall be offered in coming weeks.

“Iraq is hoping that expanding downstream activities will increase revenues and reduce reliance on important refined products.”

He also said: “There is a crucial and urgent need to launch new refinery projects to respond to government needs and put an end to the imports of refined products.”

Data from UK-based BP shows that Iraq’s refining capacity peaked at 971,000 barrels a day (b/d) of oil in 2012. It declined to 763,000 b/d in 2015 when oil sector activities were disrupted by the war with Islamic State in Iraq & Syria.

Since 2015, Iraq’s refining capacity has increased by 12.6 per cent, reaching 859,000 b/d in 2018.

Refinery demand

Ghadban said that demand for refined products is growing dramatically in Iraq. This has resulted in the importation of large quantities of imports at high cost to the treasury.

He added: “A number of opportunities for upgrading our existing refineries have been offered to our Iraqi private sector and several of them have been approved, in addition to the modern 150,000-b/d Karbala refinery, which is under construction now."

The state-owned State Company for Oil Projects is the client for the Karbala new refinery project.

In January 2014, a $6bn contract for the project was awarded to a South Korean joint venture of Hyundai Engineering & Construction (E&C), GS E&C, SK E&C and Hyundai Engineering.

Ghadban also said that Iraq was evaluating buying stakes in oil refineries in Asia. These ventures will be an investment and a means of securing demand for Iraqi crude oil.

He said: “The relevant companies and directorates within the Ministry of Oil are finalising thorough studies in having shares in refineries located in the Asian market.”