Iraqi Officials Lament Failure To Refine More Oil

BAGHDAD -- Iraqi officials say several factors have resulted in the country needing to import some 60 percent of its refined oil despite having huge reserves, RFE/RL's Radio Free Iraq reports.

Ali Hassan Ballu, chairman of the parliament's Oil and Gas Committee, told RFE/RL on February 2 that a huge increase in demand from Iraqi consumers along with outdated refineries, a lack of investment, and insurgent attacks on oil resources have forced Iraq to import a majority of its oil by-products.

More specifically, Ballu said Iraq has some refineries operating at just 50 percent capacity that can only turn crude into low-grade petroleum oil. He added that the government has also not invested in much-needed new catalytic-cracking facilities.

Ballu said that taking stop-gap measures without any long-term planning has delayed the implementation of strategic projects in the energy sector.

But Oil Minister Husayn al-Shahristani told RFE/RL that Iraq has initialed deals with foreign companies to build four new refineries in the Kirkuk, Karbala, Maysan, and Dhi Qar provinces as well as contracts to upgrade and expand the three main refineries operating now in Baghdad, Salah al-Din, and Basra.

Shahristani said the Oil Ministry is planning for Iraq to not only be self-sufficient in oil by-products but to become an exporter of such products within a few years.

Abdel Hadi al-Hassani, deputy chairman of the Oil and Gas Committee, told RFE/RL that in 2007 parliament passed a law designed to attract investment in oil and gas projects by offering incentives like a preferential price for the crude oil supplied to such refineries.

Iraq is estimated to hold the world's third-largest proven oil reserves but shortages of diesel, kerosene, and gasoline are common.