Iraq says Chinese company signed agreement to build refinery

An Iraqi investment commission signed an agreement with a Chinese company to build an oil refinery about 60 kilometers (36 miles) south of Bagdad.

The investment commission of Hilla is set to submit the agreement to the Iraqi oil ministry for approval, Commission Director General Alaa Harba said today.

The project involves the construction of a refinery with capacity of 140,000 barrels a day in the Jarf Al-Sakhr region, he said in an e-mailed statement. He didn’t disclose the name of the Chinese company.

Iraq, holder of the world’s third-largest crude reserves, announced plans in February to build oil refineries in Kirkuk, Maysan, Nassiriyah and Karbala. The four installations would add about 750,000 barrels a day of refinery capacity to help the country meet domestic needs and allow for exports, Oil Minister Hussain al-Shahristani said in February.

Iraq now has large refineries located in the Dora district of Baghdad and the southern region of Basra and in Baiji, north of the capital. The three, with potential daily capacity of 700,000 barrels, produce about 500,000 barrels a day because of wartime damages.

The country also has about 30 small refineries producing a combined capacity of 300,000 barrels a day.

Iraq, dependent on oil revenue for most of its income, is trying to increase production to fund infrastructure projects and provide steady power supplies after seven years of conflict and prior economic sanctions. The third-biggest producer in the 12-member Organization of Petroleum Exporting Countries, Iraq consumes more refined products than it can make, according to the US Energy Information Administration.

Iraq consumed about 638,000 barrels a day of refined petroleum products in 2008, up 7 per cent from 596,000 barrels daily in 2007, according to a report from the US Energy Department. That exceeds Iraq’s combined crude refinery capacity of 598,000 barrels a day, the report said.