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The new Karbala refinery south of Baghdad is expected to reach full 140,000 barrels per day (bpd) capacity by July this year, a source at the facility told Reuters on Tuesday.
The Karbala refinery, estimated to have cost just over $6 billion, is expected to begin commercial production of fuels in the middle of March, Iraqi Oil Minister Hayan Abdel Ghani said this weekend.
The start of production will see the refinery doing test runs at 60% of capacity, according to the source who spoke to Reuters.
Karbala, Iraq’s first new refinery in decades, is designed to produce gasoline, LPG, jet fuel, gasoil, fuel oil, and asphalt. According to Argus, the fuels from the facility will help Iraq cut its refined product imports by an estimated 60%.
The new refinery is not expected to affect Iraq’s crude oil exports as OPEC’s second-biggest producer could either raise its oil production or cut processing rates at other refineries, the source told Reuters.
Iraq’s exports from the southern port of Basra averaged 3.24 million bpd in December, per data from state-owned marketer SOMO seen by Reuters.
Iraq, OPEC’s second-largest producer behind Saudi Arabia, raked in more than $115 billion in oil revenues in 2023, according to figures released by the country’s oil ministry last week. That figure stems from crude oil exports of 1.209 billion barrels last year—or an average of 3.320 million bpd.
As OPEC’s second-largest crude oil producer, producing 4.5 million bpd in Q3, Iraq relies on oil revenues for nearly all of its export income.
Iraq’s oil revenues fell in 2020 to just $42 billion, according to Al-Monitor, as Saudi Arabia and Russia’s oil price war collided with the start of the pandemic, tanking crude oil prices. In 2021, Iraq’s oil revenues rebounded to $75.6 billion.
Iraq is home to the world’s fifth-largest proven oil reserves, holding 145 billion barrels.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com