Diwaniya New Refinery: Another Dubious Proposal?


September 21, 2016


By Ahmed Mousa Jiyad.


Two recent statements from a non-oil producing province proposing a new oil refinery in the province, to be financed by private investor(s), were reported by local media.

No reference was found to such a refinery in any previous refining programs, plans or studies. The brief information on the proposed refinery indicates a modern medium-sized plant with profit-sharing modality not required by related investment law and with duration much shorter than what is offered by the said law.

The proposed refinery offers reasonable and favorable terms for Iraq; but also there are many doubts pertaining the credibility and feasibility of the project to the extent that, one may argue, could eventually create a condition for “book-refinery” and de-incentivize state involvement in the refining sector; leading to further and continued reliance on imported petroleum products.

This intervention aims to bring the proposal for this is new refinery to the attention of the concerned authorities and professional community in the country in order to assess its prospects professionally and objectively.

The paper begins by providing all available information on the proposed new refinery, followed by highlighting the need for a specific contract then provide brief situation assessment and asserts the mandatory coordination with the Ministry of Oil.

Analysis of profit-sharing modality; duration of the contract period; needed infrastructure and logistics and the imperative of due diligence are addressed and the paper ends with some concluding remarks includes highlighting the needs for estimating the project IRR and suggesting the inclusion of R-Factor method for profit-sharing.


Mr Jiyad is an independent development consultant, scholar and Associate with Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway


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