Iraq refineries face perfect storm

Jan. 28, 2008 at 4:22 PM
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BAGHDAD, Jan. 28 (UPI) -- Only one of Iraq's three major refineries is working after fires and electricity supply cuts took their toll in the winter cold.

Fires in Iraq's Baiji and Basra refineries -- the first and second largest, respectively -- have been followed by a lack of electricity, compounding an already struggling refining sector.

When fully working, Iraq can refine 620,000 barrels per day, Weekly Petroleum Argus reports, but needs more than $20 billion in repairs and construction to meet a growing demand for transportation, cooking, heating and power plant fuel.

Supplies of raw crude are short as well. The Daura refinery, which can refine 110,000 bpd, is churning out only half that.

We are doing our best," Oil Ministry spokesman Assem Jihad said in a U.N. humanitarian office report. He blamed a power-plant outage for the lack of power needed to keep oil production in operation.

"We cannot be blamed for this shortfall," he said. "Once there is a stable power supply we will have uninterrupted oil and gas production."

The Electricity Ministry says the Oil Ministry continues to come short on the fuel the power plants need to produce electricity, which feed the refineries and other parts of the oil sector. Plus it says Turkey has stopped exporting electricity to northern Iraq and Kuwait stopped shipping power plant fuel to the south.

The region is suffering through an extremely cold winter, making extra supplies Iraq would rely on scarce.

Iraq is far from meeting the growing demand for fuel, despite the slow elimination of nearly all fuel subsidies, which curbs the appetite by regular and black market consumers.

"The Baiji refinery which can handle 300,000 bpd has been fixed but not restarted and the Basra fire investigation will finish before it restarts," WPA reports. Construction has begun to expand the small refinery in Najaf, and there are plans to enhance and build new refineries throughout the country, as well as attach independent power plants to refineries.

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