Iraq Reopens Baiji Oil Refinery to Boost Domestic Production

Iraq marked a significant milestone on Friday with the reopening of its largest oil refinery, a move anticipated to diminish its reliance on fuel imports. The North Refinery, situated in Baiji, a city approximately 200 kilometres (124 miles) north of Baghdad, underwent extensive damage during intense conflicts with the Islamic State group (IS) following its territorial expansion across a substantial portion of Iraq in 2014.

Assem Jihad, the spokesperson for Iraq’s oil ministry, informed AFP that following the refinery’s comprehensive rehabilitation, it now boasts an effective capacity of 250,000 barrels per day (bpd). Over the past few years, two smaller production units within the refinery complex were gradually brought back online. However, the reopening on Friday has restored the refinery to a capacity closer to its former prowess, with an additional unit capable of producing 150,000 bpd.

During the inauguration ceremony aired on state television, Prime Minister Mohammed Shia al-Sudani’s office expressed optimism about the nation’s energy independence. They stated, “With this accomplishment, we are getting closer to meeting the country’s (oil) derivative needs no later than mid next year,” indicating that achieving this goal would allow Iraq to curtail its fuel imports. Despite being an oil-rich country with a daily production of four million barrels, Iraq still finds itself importing oil derivatives, Sudani highlighted.

Constructed in 1975, the refinery had a production capacity of up to 300,000 bpd before falling under IS control in June 2014, when the jihadist group captured Baiji, once a bustling industrial hub of Iraq. However, government forces managed to recapture the facility and the city in October 2015, following intense clashes, but the extensive damage sustained meant the refinery remained non-operational for years.

Iraq hosts several other refineries, with facilities in the southern regions boasting a production capacity of 280,000 bpd, according to Jihad. Additionally, in April, Iraq celebrated the inauguration of an oil refinery in Karbala, located in the central part of the country, with a capacity of 140,000 bpd.

Despite Iraq’s substantial oil wealth, the nation’s dilapidated infrastructure and systemic corruption have impeded reconstruction efforts. Iraq remains heavily reliant on imports to meet its energy demands, a paradox considering its vast oil resources. According to the World Bank, Iraq possesses 145 billion barrels of proven oil reserves, equivalent to 96 years’ worth of production at the present rate.

The significance of oil revenues to Iraq’s fiscal health cannot be overstated, as crude oil sales constitute 90 percent of the Iraqi budget’s revenues. As Iraq moves towards revitalizing its oil infrastructure, hopes are high for a more self-sustaining energy sector, potentially reducing its reliance on imports and fostering greater economic stability.

Meanwhile, in the northern Kurdish province of Iraq, efforts are underway to bolster regional energy infrastructure to complement the country’s broader initiatives. Despite challenges, Iraq’s strides in rehabilitating its oil refineries signify a crucial step towards enhancing its energy independence and economic resilience on the global stage.

In the midst of Iraq’s efforts to revive its oil sector, foreign interests have remained keenly focused on the country’s energy resources. Major international players, including oil corporations from Europe, Asia, and the Americas, have been eyeing Iraq’s oil industry for investment opportunities and partnerships.

The reopening of the Baiji refinery signals not only a milestone for Iraq’s energy independence but also attracts renewed attention from global stakeholders seeking to participate in the nation’s oil sector revitalization.

Image Credit: Maria Lupan/Unpslash

Tags : Iraq, Oil