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Iraq oil ministry approves oil refinery in Kirkuk that could cost $5 billion

By Mahmud Yasin Kurdi 29/5/2017
An oil installation in the oil-rich city of Kirkuk, claimed both by Baghdad and Erbil. File photo: Rudaw
An oil installation in the oil-rich city of Kirkuk, claimed both by Baghdad and Erbil. File photo: Rudaw

 

ERBIL, Kurdistan Region – The Iraqi government has given permission for an oil refinery to be built in Kirkuk that is expected to cost $5 billion.

Baghdad’s decision to build a huge refinery in Kirkuk comes after the Black Force of the Patriotic Union of Kurdistan (PUK) seized control of the North Oil Company in the city of Kirkuk in early March, stopping the oil export for several hours before it resumd.

The Kurdish force, backed by all Kurdish parties in Kirkuk, seeks to force Baghdad to implement an agreement between the Kirkuk governor and Baghdad reached in January, notably in opening an oil refinery in the multi-ethnic Kirkuk.

Several days after the force deployment, the Iraqi Prime Minister Haider al Abadi met with a PUK politburo delegation led by the party’s first deputy Kosrat Rasul Ali, Hero Ibrahim Ahmed (the wife of Jalal Talabani) and the party’s Kirkuk officials. They subsequently announced they had reached an agreement regarding the problems of the North Oil Company.

According to Point 6 of the January agreement, the oil ministry should "help the Kirkuk province to begin expanding the Kirkuk oil refinery and its work with Barham company to install a new refinery."

Some other large companies in the Kurdistan Region have submitted their proposals to the Iraqi oil ministry, including Faruq Holding, owned by Faruq Mala Mustafa, who is very likely to receive the project. If he does, he will be borrowing a $1 billion loan from a Chinese bank. 

“The project has not been officially given to anyone. We will talk about it after it is announced,” Faruq Mala Mustafa told Rudaw.

The oil minister had earlier said that the plan to invest in Kirkuk’s oil infrastructure had long been pursued, but the situation in Kirkuk and Iraq was not helpful at this stage.

3 to 5 years to finish the refinery

“The Iraqi oil ministry has given the go-ahead for a modern refinery to be built which will cost $5 billion," Rebwar Taha, an Iraqi MP from the PUK, told Rudaw. "The project will be implemented in phases and might take 3 to 5 years to finish,” 

“Kirkuk has a refinery that is 65 years old, refining only 30,000 oil barrels per day," Taha who represents Kirkuk in the Iraqi parliament added. "It cannot fulfill Kirkuk’s demands. This is while Kirkuk is Iraq’s second biggest oil city. This is why we have asked for the refinery’s production rate to be increased to 70,000 barrels a day so that oil from Kirkuk is no longer taken elsewhere under the pretext of refining it."

Building this refinery will create hundreds of job opportunities for the people of Kirkuk, especially for the graduates of the mechanical and other technical departments at Kirkuk University.

“Some companies have submitted their proposals via Baghdad, the Iraqi government and the oil ministry," Rebwar Talabani, head of Kirkuk’s provincial council, told Rudaw. "It is important for us that the priority be given to Kirkuk’s people in building the refinery and then staffing it.” 

How is Kirkuk’s oil sold?

The North Oil Company produces nearly 160,000 barrels of oil daily, from which 20,000 barrels of oil are transported through tankers to Dora Refinery in Baghdad order to fulfill the fuel demands of Al-Quds power station just north of Baghdad.

In addition, 30,000 more oil barrels are used to account for internal needs. The remaining 110,000 oil barrels are exported. Half of it is sold by the Kurdistan Regional Government (KRG), and the other half by the Iraqi government.

According to the agreement between Kar Group and the Iraqi government, Kalak Refinery near Erbil, which is owned by Kar Group, receives 40,000 barrels of oil every day from the North Oil Company in order to refine it for the Iraqi government. 

Comments

 
Jay | 30/5/2017
I hope Iraqi central government has not agreed to PUK demands to divert them away from Kurdish right for independence, since Hero is involved it is definitely blackmail.
Yassir Fekaiki
Yassir Fekaiki | 2/6/2017
Each main political block is entitled to own and run 2 refinery projects for its commercial gains, this includes PUK . this is part of the agreement executed in London of power and commercial sharing between the parties.
Eugene | 5/6/2017
Well...5 yrs. is 5 yrs....at least it is in the Kirkuk area......if Kurdistan(Arbil) is independent...then the refinery may be spared violence if another power (like U.S.,Europe,or NATO attacks Tehran & Baghdad)...and much of it will be built with monies from outside the Kurdistan region...a blessing...
| 8/6/2017
Well PUK Kirkuk and KRG should wave goodbye to this project as independant Kurdistan is around the corner and Baghdad is not obliged to pay for project outside its control and region, including any share of the Iraqi budget which should stop with immediate effect.

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