The prime minister of Iraq, Nouri al-Maliki has confirmed a deal worth $6bn with Satarem, a Switzerland-based heavy engineering company, to build Iraq’s first large-scale oil refinery in the southern part of the country. Located near Amara in the Maysan province, the Maysan oil refinery will be constructed and operated by Satarem and, once operational, it is expected to produce up to 150,000 barrels of oil a day.
The deal is one of six greenfield projects in the country's coal, oil and natural gas sector this year, according to data from fDi Markets, a greenfield investment monitor. According to Mr al-Maliki, the refinery will significantly meet local demand for fuel. “[This is] an important investment project… which will contribute towards filling the need in the country for oil products,” he said at the contract signing ceremony.
Although Iraq has the world’s fifth largest proven crude oil reserves, and it passed Iran as the second largest producer of crude oil in the Organisation of the Petroleum Exporting Countries in 2012, according to the US Energy Information Administration, the country has struggled to meet local and international demand for oil due to its constrained refining capacity. Revenues from the country’s crude oil exports make up 95% of the government’s budget, according to the Energy Tribune, an online commodities publisher, and the Maysan oil refinery is expected to boost the country’s refining capacity.
The Iraqi government has embarked on an ambitious scheme to boost oil production by 29% in 2014, according to the Energy Tribune, and fDi Markets shows that the country has experienced some success in attracting investors into its oil sector. Between January and September 2013, the coal, oil and natural gas sector attracted the second largest amount of capital investment of all sectors in Iraq, with $4.1bn of investment compared to the real estate sector's $4.7bn.