21 July 2008
Iraq’s Daura refinery should commission a new 70,000 barrel per day crude distillation unit at the end of the year, raising capacity to 160,000 b/d, Midland Refineries Director-General Dathar al-Khashab told International Oil Daily last week. It will be the first addition to the refinery, near Baghdad, since the US-led invasion in 2003.
A contract for a second crude distillation unit, awarded like the first one to Czech firm Prokop Engineering, is expected to add a further 70,000 b/d to capacity by early 2010.
After five years of chaos and insecurity, this gradual, measured approach could help turn the two new units into the nucleus of a state-of-the-art refinery.
“We have had big projects on offer since 2003 but we had problems because foreign companies were not interested in building grassroots refineries. The idea now is that once we have built up a new refining capacity of 140,000 b/d and added other units like isomerization, reformers and cracking units, then we can decommission the old units, provided market needs are met,” al-Khashab said last week.
Daura, Iraq’s oldest refinery, has been running at just 55,000 b/d — well below its 90,000 b/d nameplate capacity — because of problems getting hold of feedstock. All its crude has to come from Basrah, in the south, because of shortfalls in supplies from the north, with oil pipelines from Kirkuk subject to constant attack. But reconstruction now under way could allow Daura to source an extra 55,000 b/d of crude later this year, in time for the commissioning of the new unit. Further volumes needed to run the plant at full capacity would be trucked from Kirkuk to Daura, al-Khashab said.
An improvement in the security situation in Baghdad and other areas is giving Iraqi officials new confidence to carry out projects put on hold since the invasion. Despite high revenues from oil exports and the allocation of investment budgets to ministries, many ministries have underspent in the past two years, although that situation is expected to change, observers say. Projects that have been on hold until now include a 300,000 b/d grassroots refinery in Nassiriyah and a 140,000 b/d refinery in Missan, both in southern Iraq, as well as a 140,000 b/d refinery in Karbala, south of Baghdad.
“We spent 97% of our $120 million budget allocated to the Midland refineries and I have asked for a further $40 million for new projects so far,” al-Khashab said.
These new projects include a catalytic cracking unit to improve efficiency. About 50% of Daura’s output is fuel oil, and the new unit could crack about 40,000 b/d of that into much-needed gasoline and kerosene. A contract is currently under negotiation.
In addition to Daura, Midland Refineries manages several small plants being built in central Iraq, including Najaf, Samawa and Diwaniya. A first 10,000 b/d processing unit started up at Najaf in late 2006 and a similar unit began operations this year. A third unit should raise capacity to 30,000 b/d next year. Two similar 10,000 b/d units were built in Samawa in 2005 and 2006 and a third will be added next year. Work on the Diwaniya refinery began in April this year and it is expected to get its first 10,000 b/d unit by year-end.
Najaf and Samawa currently produce naphtha that is sent to Daura to be turned into gasoline, while kerosene and gas oil are used locally. “The small refineries are first steps towards building them up into grassroots refineries. We are about to sign contracts for reformer units for both refineries to process the naphtha into high-octane gasoline for local consumption,” al-Khashab said.
The 170,000 b/d Basrah refinery, Iraq’s second major refinery, looks set to get a 70,000 b/d modern crude distillation unit thanks to a procurement and construction contract that also went to Prokop Engineering. Commissioning is planned for end-2009.
According to al-Khashab, power generation problems mean the third major refinery at Baiji is currently running at just 70% of its 290,000 b/d capacity. Crude feedstock is supplied by pipeline from Kirkuk. While the lines have been subject to sabotage in the past, they have become more reliable in recent months as repairs continue.
By Ruba Husari, Daura
(Published in International Oil Daily July 21, 2008)