UK oil major BP is considering plans to build a gasoline import terminal in the south of Iraq, as the country struggles to increase its domestic refining capacity.

BP plans to establish the terminal in the Khor al-Zubair Free Zone, just north of Basra, to trade refined gasoline for crude oil, says a source close to the project.

No details on the capacity of the terminal were available, as the scheme is currently in the feasibility study and early design stage.

BP is the lead developer of the giant Rumaila oil field in the south of Iraq, along with China National Petroleum Corporation (CNPC). In May 2011, it lifted about 2 million barrels of crude oil from the field, worth $200m, as part of its payment for the development.

The consumption of refined products is rising in Iraq, particularly of fuel oil and gasoline, which is being driven by Iraq’s growing economy. Domestic production is failing to keep pace with demand.

The Oil Ministry aims to increase Iraq’s refining capacity by more than 700,000 barrels a day (b/d) by 2015. The government is also hoping to attract private-sector interest in a grassroots refinery programme, funding feed studies for four new refineries, costing an estimated $23bn, with a total processing capacity of 740,000 b/d.

The largest at Nassiriyah in southern Iraq will cost almost $8bn and will have a capacity to process 300,000 b/d of crude from the nearby Nassiriyah, Gharraf and Rafidain oil fields. It will include a fluid catalytic convertor (FCC) unit, hydrocracking unit and an isomerisation unit to produce additives to turn naphtha into high-octane gasoline.

While the intention is clear, industry sources are wary that signs of progress on the projects are hard to see.

“It shows [BP does not] have much faith in the Oil Ministry’s refinery expansion plans,” says the source.