The Kurdistan Regional Government has closed 61 illegal refineries since last year, when it approved new regulations aimed at curbing the access of private energy companies to Kurdish oil. All of the shut-down refineries, according to the Ministry of Natural Resources, were unauthorized by the government. Just 21 were authorized and these were left to cater to the needs of the local population and industry.
Yet this seems to be just the start: the ministry said that there are 129 more unauthorized refineries that will need to be closed. Many of the closed ones and the ones to be closed fall short of modern refinery operation standards, said Dilshad Shaaban, MP and member of Erbil’s natural resources committee.
According to a local government official from Sulaimani, many of the unauthorized refineries are “associated with influential people and officials and the fact that they still receive crude oil supports this claim.” On the other hand, refinery owners approached by Rudaw, a local news source, said that they have spent millions on the refineries but have not received any crude oil over the last two years.
Kurdistan produced an average of 597,587 barrels of crude per day last November – the latest monthly production data report released by the KRG’s Ministry of Natural Resources, or 17.93 million barrels for the whole month. The autonomous region accounts for a substantial part of Iraq’s total 4.8 million bpd for the same month, which has now dropped considerably because of the production cut agreement struck by OPEC in November.
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The regional government is at odds with Baghdad as it is trying to strengthen its grip on local natural resources, among them the biggest field in northern Iraq, Kirkuk, which has reserves estimated at 9 billion barrels of crude and has a production capacity of 1 million bpd. The field, like several others, is disputed by Baghdad.
The autonomous region is now preparing to hold an independence referendum, possibility as early as this year, which is bound to further increase tensions between Erbil and Bagdad.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.