Iraq’s Oil Ministry has signed an agreement for the construction of a 200,000-barrel-a-day (b/d) refinery with the local Refinery of Karbala Corporation (RKC).

“Karbala Refinery will be located 100 kilometres south of Baghdad on a 6-square-kilometre plot of land, and will be the most advanced state-of-the art refinery with an almost full conversion rate and with an estimated cost of $6.5bn,” says KRC’s chief executive Dean Michael, reports Trade Arabia news agency.

Under the build, own, operate (BOO) deal, the company has committed to begin production of high-octane gasoline and diesel fuel for domestic consumption within four years of signing the final contract.

Italy’s Saipem will provide the processing and technical aspects of the project.

The planned refinery is some 60,000 b/d larger than the proposed 140,000-b/d refinery, for which France’s Technip won a $25.2m front-end engineering and design (feed) contract in 2009. The company completed a feasibility study at the end of 2010. Sources close to the firm said in May that the government was considering the project, but no decision had been made.

Three other refineries are planned. The largest, at Nassiriyah in south Iraq, will cost almost $8bn and will have a capacity of 300,000 b/d. FosterWheeler is conducting the feasibility study and design.

Two 150,000-b/d refineries, costing $5bn each, are planned for Missan province in the south and Kirkuk in the north. The US’ Shaw Group will complete the feasibility study and design for both by the end of 2011.