11-05-04

A program of rehabilitation and reconstruction for the Iraqi refining industry is beginning to take shape. A. Barifcani, advisor on downstream operations for Iraqi's Ministry of Oil, described plans for the industry at the Middle East Petroleum & Gas Conference in Bahrain. He didn't discuss how the program would be financed other than to say a "prudent, thoughtful investment plan" is in place.

Also at the conference, Hazim Sultan, director general of the ministry's Reservoirs and Fields Development Directorate, said Iraqi production of crude oil would reach 3.3-3.5 mm bpd by the end of 2005. Progress both upstream and downstream comes despite the threat of sabotage and attacks on workers. Sultan said Iraqi oil professionals have learned from past difficulties to sustain operations under challenging conditions.
"They fear nothing," Sultan said.

The oil ministry plans to add processing units to facilities in each of three refining companies. For North Refinery Co. (NRC), anchored by the Beiji refinery built during the 1980s north of Baghdad, it plans to add two package units -- which is what it calls 10,000 bpd topping plants it operates throughout the country. It also plans to add reforming units at the 20,000 bpd Seria refinery and 30,000 bpd Kirkuk plant, as well as a 30,000 bpd fluid catalytic cracker and 20,000 bpd isomerisation unit, apparently at Beiji.

The ministry also plans to rehabilitate the Beiji hydrocracker and upgrade a lube plant and all processing units. NRC has total design crude capacity of 402,000 bpd, of which 288,000 bpd is in use. Plans for South Refinery Co. (SRC), with main facilities at Basrah, call for rehabilitation of a 70,000 bpd crude unit and modernization of all processing units.

Construction plans for the company include a 10,000 bpd reforming unit; two 15,000 bpd, light gas-oil hydrodesulphurisation units, a 9,000 bpd isomerisation unit, a cracking unit, a 2,500 bpd reformer at Nassiriya, and three 10,000 bpd crude units. Design crude capacity in SRC, built in the 1970s, totals 190,000 bpd, of which 150,000 bpd is in use.

In Middle Refinery Co. (MRC), which includes the Daura refinery built during the 1950s outside Baghdad, the ministry plans to add a 70,000 bpd distillation unit, a continuous catalytic reformer, a gas-oil hydrodesulphurisation unit, and a 20,000 bpd reformer in Najaf. It further plans to replace two crude units with a 70,000 bpd unit and modernize all processing units.

MRC has total distillation capacity of 122,000 bpd. Barifcani didn't say how much was in use. The ministry hopes soon to build two new refineries-one with capacity of 20,000 bpd at Konya and another with 10,000 bpd of capacity at Erbil. In the longer term it wants to build a 250,000-300,000 bpd refinery oriented to gasoline output.

On progress in Iraq's upstream, Sultan said, "we have more or less picked up the pieces of our production rates prior to the last war."

Like the refining industry, Iraq's producing industry was ravaged by three wars since 1980 and economic sanctions following the former regime's invasion of Kuwait in 1990. Direct damage from the most recent war, which expelled President Saddam Hussein from power a year ago, was limited to a pipeline pump station and a Tigris River bridge for crude, products, and natural gas pipelines.

Subsequent looting and sabotage were extensive, however, and caused equipment bought with funds from the United Nations Oil-for-Food program during the sanctions era to disappear. Production has climbed back to about 2.5 mm bpd, 400,000 bpd less than its level before last year's invasion of Iraq.

April exports, Sultan said, averaged 1.806 mm bpd, of which 1.575 mm bpd passed through the Basrah terminal on the Persian Gulf and 231,000 bpd through the recently restarted pipeline from northern fields through Turkey to the Mediterranean. Export capacities are about 500,000 bpd through the north and 2 mm bpd through the Basrah and partially restored Khor Al-Amaya terminals. Capacity of the northern pipeline might rise to 800,000 bpd by yearend if rehabilitation continues.

"Always we keep our fingers crossed, hoping that nothing will happen," Sultan said. "We get surprises all the time."

To raise production to 3.5 mm by the end of next year, he said, "we do not have to do much." Recompletions and connections of wells already completed can boost output to that level with little drilling, he said. The ministry soon will seek bids for reservoir studies of giant Kirkuk field in the north and Rumaila field in the south.

Iraq's longer-term production capacity goal remains 6 mm bpd, which Sultan said is possible by the end of the current decade with "tremendous work."

Source: PennWell Corporation