Iraq's government has awarded a US$6 billion contract to a South Korean consortium to construct oil refining facilities in Karbala province.
The Iraqi oil ministry awarded Hyundai E&C, Hyundai Engineering, GS Engineering & Construction, and SK Engineering to undertake engineering, procurement and construction works for the planned 140,000 barrels per day (bpd) refinery, which is located 100 kilometres south of Baghdad.
The project follows regional economic development plans that include power plants and refineries to increase electricity production, build up infrastructure and spur job creation.
The Karbala Refinery Project, which includes the construction of four refineries, is expected to produce a range of products including liquefied gas, petrol, gas oil, fuel oil and jet fuel to serve growing domestic needs.
Hyundai E&C and its affiliate Hyundai Engineering have taken a 37.5 per cent share in the project worth $2.26bn, Hyundai E&C said in a regulatory filing yesterday,
GS has a 37.5 per cent share, while SK has a 25 per cent share, the statement said.
“Gas represents a valuable commodity and economic multiplier for Iraq’s reconstruction and infrastructure development,” Luay Al Khateeb, the visiting fellow at Brookings Institution, wrote in a paper co-published by Harvard University’s Belfer Centre and Rice University’s Baker Institute Center for Energy Studies in November.
“As much of Iraq’s gas is associated and will be a by-product of oil production – unlike other Middle Eastern countries – its production could be cost effective and competitive to regional markets; the development cost of gas is linked to capturing, processing, and transportation, with no cost required for exploration and production,” Mr Al Khateeb said. “However, due to the lack of infrastructure facilities, 55 per cent of current gas production is flared, leaving very little to feed the deprived national grid and industry.”
Iraq’s monthly oil production in January was 3.05 million bpd, according to Bloomberg data.
halsayegh@thenational.ae
