Ministry awards Nassiriya refinery to Canadian firm - Panorama Insurance Brokers

Ministry awards Nassiriya refinery to Canadian firm

BASRA – Iraq’s Oil Ministry has approved a preliminary agreement with Vancouver-based Pacific Future Energy to build a refinery in Nassiriya.

Pacific is likely to work on the project in tandem with SNC-Lavalin, a Montreal-based engineering and construction firm that has a partnership with Pacific dating back to 2015, and longstanding ties in Iraq.

It is not clear whether the project will survive Iraq’s ongoing political transition, however. Officials close to the talks say outgoing Oil Minister Jabbar al-Luiebi has approved the deal on Tuesday, but in order to be finalized, the contract will need to be approved by the incoming government, including a different oil minister.

The prospective 150,000 barrel per day (bpd) refinery has long been a goal of the ministry, not only to develop needed domestic refining capacity, but also to provide an outlet for production from the nearby Nassiriya oil field.

An agreement has not yet been announced formally, and many details remain unknown. Both Pacific and SNC-Lavalin declined to comment for this story.

In a statement sent by email to Iraq Oil Report, Yahya al-Nassiri, the governor of Dhi Qar province, where Nassiriya is located, said the refinery “was assigned… at a cost of $4 billion, and the companies shall start the contract’s implementation in two months.”

It is not clear what the contract model will be, though it’s likely to be governed by Iraq’s 2007 refinery investment law that provides a guaranteed supply of discounted crude, long-term investment terms, and the rights to sell products without state subsidies.

Nassiri said the project would create 2,000 jobs in the province, and that it was awarded to “a group of Canadian and Chinese companies.”

A senior oil official involved in the talks said Pacific was awarded the project over a competing Chinese consortium bid; that the price was $5 billion; and that the project would last for 25 years.

That official said that Luiebi approved the project, and that a power station would be built along with the refinery, to power the refinery as well as send additional electricity to the national power grid.

“The investment company will make a contract with SOMO to market the oil products according to the international prices,” the official said.

“The current contract is a conditional contract, [for Pacific to] complete some of the requirements before the contract’s implementation,” the official said, adding it is likely to take 60 days until it is completed.

Iraq has been discussing the development of the Nassiriya oil field with international oil companies for more than a decade. Initially, the Oil Ministry tied a prospective field development deal together with a 300,000 bpd refinery project.

The refinery component was subsequently reduced to 150,000 bpd, but no offers moved forward and the ministry ended the effort earlier this year.

Instead, the refinery has remained open to investors, while the newly formed Dhi Qar Oil Company has taken responsibility for further developing the field. It produced an average 84,000 bpd in August, and has previously produced as much as 100,000 bpd.

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