Iraq refining sector makes incremental gains

Projects nearing completion this year could boost refining capacity by 140,000 bpd, despite chronic failures to attract foreign capital.
The Karbala refinery, February 2022. (LIZZIE PORTER/Iraq Oil Report)

Iraq has doubled its oil production capacity in the last decade to become the second-largest producer and exporter in OPEC, but the country has failed to realize most of its plans for a similarly dramatic expansion of refining capacity.

The result is that current yields of refined products from existing refineries do not match demand for the light end of the barrel, forcing the government to import about 90,000 barrels per day (bpd) of gasoline and 20,000 bpd of diesel, according to Oil Ministry data. Iraq spent a total of $3.3 billion on refined product imports in 2021, according to data from the state oil marketing company (SOMO), and its import bill for the first quarter of 2022 was $1.55 billion.

But some relief should come later this year, when upgrades and additions are completed at the Shuaiba refinery in Basra, and when the first unit of a modern greenfield refinery under construction at Karbala comes online. Barring any further delays, those projects should add 140,000 barrels per day (bpd) of refining capacity by the end of 2022.

The total functional capacity of Iraq's refineries stands at just over 1 million bpd, according to an Iraq Oil Report analysis based on refinery-by-refinery data gathered from senior officials at state refining companies, officials working at refineries throughout the country, and industry officials working in Iraq's refining sector. Actual refinery intake has been somewhat lower, although trending upward in recent months to just over 800,000 bpd.

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