Will Iraqi new oil policies provide "fruits"?

Sunday, September 25, 2016

Baghdad/ Iraq

A number of oil economics' analysts remained silent on the developments of the oil markets due to their rapid pace and inability to predict the next move.

Currently, the analysts began seriously talking about the Iraqi oil, particularly after the assumption of the new oil minister Jabbar al-Li'aibi.

In the light of his statements, Iraq is expected to increase its oil production to unprecedented level despite the decline in oil prices on the international level.

Foreign oil sources described the new minister as "making the Iraqi oil sector breathing", through investments in four new oilfields, though Iraq failed to get new investments since 2009.

It is well known that the Iraqi oil ministry cannot invest in these four oilfields due to the decline in its annual budget and inability to sustain such gigantic projects, so Iraq will remain within the circle of 60-70% production capacity, in best cases,'

As for the refineries, Iraq is unable to refine its heavy oil, which obliged it to import part of the light crude oil needs till 2014 that reached to 90-100 thousand b/d.

Thus, Iraq has to establish its facilities to refine its oil before starting more production, as well as have to deal with the dangers of this industry.

Iraq has the capacity of refining about 600.000 b/d in comparison to 900.000 b/d before the appearance of Da'ish (ISIS) organization in June, 2014. The real catastrophe is the destruction of Beiji refinery, which is expected that it could not be rehabilitated any more.

Minister al-Li'aibi stated, last week, that moves to rehabilitate Beiji refinery are underway, but if the feasibility studies were not good enough, a new refinery should be built again.

Iraq spent millions of dollars to meet its basic needs of refined oil products since 2003 instead of building its own refineries, despite having all possible financial resources to do so.

Experts believe that the Iraqi move to build four refineries in Karbala, Missan, Nassiriya and Kirkuk provinces is "too late", in addition to neglecting other areas like Kut that produces 100.000 b/d and Samawa which attains the production of 70.000 b/d.

They believe that the ministry should "reconsider" its future plans, particularly after

discovering the granting of Missan refinery to a company that was only a "mail box" in Switzerland.

The observers noted that the project was not cancelled despite all "mistakes starting from its sites and transportation facilities".

"The refineries should not follow the sites of production, but should have the availability of easy transportation, consumption areas, export ports, which all these are not found in Missan, Kut and Kirkuk refineries", observers elaborated.