Lukoil considers sulphur facilities in Iraq

05 December 2011

Russian firm in talks with engineering firms for sulphur handling and export

Russia’s Lukoil is considering the construction of sulphur production facilities at the West Qurna Phase-2 oil field in the south of Iraq.

The Russian firm, which leads the development of the field, along with Norway’s Statoil has conducted a feasibility study for the developing sulphur production, handling, storage and export facilities.

The scheme was proposed earlier this year, but stalled as Lukoil focused its investments on increasing crude oil production capacity. 

A decision on whether to proceed with the project has not been made as Lukoil considers options for transporting and storing the product for export, but the firm is in talks with several engineering design firms, including France’s Technip, a source close to the project tells MEED.

“They [Lukoil] have production starting up in 2013 and have another five years or so before hitting their plateau, so they will want the sulphur facilities ready by then”, says the source.

The scheme faces some of the same problems that Abu Dhabi’s Shah gas project faced in 2009 and 2010, chiefly how to transport sulphur production for export. Federal rail company, Union Raily is now building the first phase of its railway to transport granulated sulphur between the Shah gas field in the interior of the country and Ruwais on the Gulf coast.

This is unlikely to be suitable given Iraq’s security situation, says another industry source, nor would a sulphur pipeline, which was also proposed in Abu Dhabi. Transport by truck would therefore be the most likely solution.

Lukoil is developing the field along with Norway’s Statoil and expects to begin production in 2013 at 150,000 b/d, rising to 1.8 million b/d by 2017.

It is yet to award a series of contracts, which have received bids since March. Contractors had hoped to see awards for oil processing, gas gathering, pipelines and power plants awarded in November (MEED 4:11:11).

According to Kuwait-based Integrated Environmental Solutions, of the 67 million tonnes of sulphur produced globally in 2004, almost 70 per cent came from the oil and gas sector, compared to only 8 per cent from mining and 25 per cent from smelters.

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