Iraq’s archaic refining fleet churns out huge volumes of fuel oil, providing power plants with enough volumes to offset gas shortages and leaving a substantial surplus for export. For the year ahead, Iraq may have to burn record volumes of both fuel oil and crude during the summer’s peak electricity demand season after the US this month opted not to renew a 120-day waiver permitting payment for Iranian electricity imports (MEES, 14 March). With Iraqi officials concerned Washington could move to block crucial Iranian gas exports, they are looking at alternatives, including LNG imports, but time is running out.
Iraq’s refineries can produce up to 500,000 b/d of fuel oil, over 40% of products output, but this would entail maxing run rates and reducing crude oil exports. Iraq would struggle to manage this and implement the deep Opec+ “compensation cuts” it last week committed to (MEES, 21 March), leaving Baghdad in a tricky position. (CONTINUED - 1245 WORDS)
