The final investment decision for the $500m phase three expansion of the Bazian oil refinery has been delayed amid ongoing talks between the Kurdistan Regional Government’s (KRG) Ministry of Natural Resources (MNR) and the local Qaiwan Group, according to a source close to the project.

“Originally the decision was due to be made in September 2015,” the source said. “It is hoped that the decision will be made before the end of the year.”

An initial version of the front end engineering design (Feed) for the project was completed for the project by France’s Technip in the second quarter of 2015.

The initial plans were revised in the second quarter of 2015 increasing the planned capacity of the project and making adjustments so that the facility could process a different feed stock.

“Due to a change in the oil fields that would be supplying the facility with crude – the specifications of the refinery had to be altered,” the source said.

No official announcement has been made on engineering, procurement and construction (EPC) awards for the refinery expansion project or the $200m crude pipeline which will link the Bazian refinery directly to oil fields.

The EPC contract for the refinery expansion has not been publicly tendered, with Qaiwan Group choosing to deal with potential contractors individually.

Qaiwan wants to increase the facility’s refining capacity to 100,000 barrels a day (b/d) from the current 34,000 b/d by 2018.

The latest delay to the project comes amid a financial crisis in Iraqi Kurdistan as the KRG struggles to pay international oil companies and public sector wages.