Baghdad is finally coming round to the need to offer incentives to attract investors into its moribund refinery sector. The planned 300,000 b/d Nassiriya integrated refinery and field development project and the 140,000 b/d Karbala refinery projects are the priorities. Refinery runs last year of 585,000 b/d were certainly up on earlier post-2003 years – 2009 throughputs were around 450,000 b/d. But given that Iraq’s dilapidated refineries produce 50% fuel oil, this falls far short of requirements for clean products. Iraq has had plans for a $30bn investment drive to build four new refineries totalling some 740,000 b/d of capacity for some time. But incentives under 2010 new refinery law, which included a guaranteed supply of crude at 5% discount and a 10-year tax holiday, have proved wholly inadequate (MEES, 23 April 2012).
Now for Nassiriya, a state guarantee of a return on investment is thought to be on offer. Terms will be revealed at a road show in the Jordanian capital ‘Amman on 8-9 April. “There are no details yet, but my understanding is that they really are going to offer a major change,” says one executive. While not confirmed, the government is believed to be considering financing the $5bn Karbala project. And a further improvement to the 2010 law has been approved by parliament’s Oil and Energy Committee and should be presented to deputies for approval within the next few months, ‘Ali Dhari al-Fayadh, deputy head of the parliamentary Oil and Energy Committee, said at a conference in Dubai on 25 March. Nassiriya, even with incentives, is likely to prove challenging. It will be the first refinery in the region offered with dedicated oil field development. Products are subsidized in Iraq and this poses a question on how to make the project profitable. (CONTINUED - 288 WORDS)
