Iraq’s Oil Ministry has finally launched the Nasiriya Integrated Project, inviting international oil firms to prequalify for the development of the 4-billion-barrel oil field and refinery in the south of the country.
The Oil Ministry’s Petroleum Contracts and Licensing Directorate (PCLD), has set a deadline of 13 December for refinery operators and upstream oil firms to submit their prequalification documents.
The project covers the integrated development of the Nasiriya oil field in the Thi Qar province of southern Iraq, along with the construction and operation of a new 300,000-barrel-a-day (b/d) refinery.
Companies already prequalified for Iraq’s previous upstream licensing rounds have also been requested to update their submissions to cover their refinery activities.
PCLD will announce the prequalified companies by the end of January and will hold meetings with the firms in the first quarter of 2013.
The firms will then be invited to review data packages for the field, along with discussions over a model contract, with a possible award by the end of 2013.
US engineering firm, Foster Wheeler was awarded the front-end engineering and design (feed) for the estimated $8bn refinery in 2008 and has now completed the designs.
Faced with the pressing lack of refining capacity, Baghdad aims to increase Iraq’s refining capacity by more than 700,000 b/d by the end of 2015. The bulk of investment will be in greenfield projects with at least $50bn being spent over the next 10 years on the construction of five new refineries, at Karbala, Kirkuk, Missan, Mosul and Nasiriyah.
If it goes ahead, Nasiriyah will be the largest of Iraq’s planned new refineries, processing crude from the nearby Nasiriyah, Gharaf and Rafidain oil fields. The refinery is designed to satisfy demands in the south of Iraq, but also to supply refined oils to the Baghdad metropolitan area.
Iraq has previously sought to award an upstream development contract for the field. Japan’s Nippon Oil, Spain’s Repsol, Italy’s Eni and US firm Chevron all submitted proposals without success.
The decision to link the development of the field with the construction of the new refinery is sensible, given the lack of capacity in the southern oil export system. The bottlenecks to the network, which is already backed up with crude oil exports from Basra’s oil fields, mean there is little room for additional exports from Nasiriyah.
Breaking with its tradition of state control over the oil industry, parliament passed a refining law in 2007, which gives foreign firms the right to build refineries and operate them over a 40-year period, as well as setting out the overall terms of investment.