Daura Refinery Expansion On Schedule
Iraq's state-owned Midland Refining Company has received two of the three components for the second 70,000 barrels per day (b/d) expansion to its 140,000b/d Daura refinery, according to the company's director-general Darthar al Khashab, who said that the new unit should be commissioned in 2010. The statement indicates progress towards the second in a series of three upgrades at the refinery, which are intended to increase its capacity to 280,000b/d by 2011.
According to the statement by al Khashab, reported in Upstream, the crude distillation unit will be installed by Czech firm Prokop Engineering in January 2010 at a cost of US$54mn. Two of the unit's components are already installed on site. The third part of the unit, the furnace, is expected to be delivered by December 2009. According to al Khashab, the new unit will begin operations in February 2010. He added that the refinery was expected to increase capacity to 280,000b/d in mid-2011 with the installation of a third 70,000b/d crude distillation unit. This would make the Daura refinery the second biggest in the country after the 310,000b/d Baiji facility.
The Daura refinery, located in the south of Baghdad, was constructed in 1953 and started operations in 1955. It suffered missile damage during the 1990-1991 Gulf War and, as a result of looting and gradual decline, was producing only 90,000b/d by 2003. In 2005 the refinery signed a deal with Prokop to build the first of two 70,000b/d crude distillation units, which was installed in January 2009 at a cost of US$43mn. Although this temporarily brought the capacity to 160,000b/d, capacity was subsequently reduced by the transfer of two 10,000b/d units to other refineries. The deal for the second unit was signed with Prokop in 2007.
The installation of the third unit, which was ordered from US construction company Hydrocarbon Supply in 2005, had been delayed by problems finding a partner, which have since been resolved, with a deal signed with Jordan's International Free Company. This final unit, which al Khashab expects to be installed in mid-2011, is currently being constructed in South Korea.
Iraq's oil industry, including its refining sector, is owned and controlled by the state. Overall, the country has 10 refineries and topping units, with total capacity estimated at 681,000b/d at end-2008 by the BP Statistical Review of World Energy, June 2009 and at 598,000b/d in January 2009 by the Oil & Gas Journal. Utilisation rates are thought to be around 60%. Before the US-led invasion in 2003, it was believed that Iraq needed to refine 560,000b/d in order to produce 400,000b/d of refined products for domestic consumption. At present, problems with the refineries and power supplies force the country to import substantial volumes of petroleum products from Iran, Jordan, Kuwait, Syria and Turkey.
The news that the second unit should be ready by 2010 represents progress on the project to expand capacity at the Daura refinery. It is also positive for Iraq, which has been plagued by shortages of refined products, as refineries have been operating well below capacity due to a persistent lack of investment dating back to the time of former president Saddam Hussein.