First quarter of 2008 Iraq signed contracts with three small companies from the Czech Republic to help modernize the Basra refinery, an important plant in the South.
Deals range between $50 and $70 million and one of them includes the setting up of a new refinery to help increase production capacity with 70,000 barrels per day.
In June 2008, several major companies were short listed for oil contracts, including BP, Exxon Mobil, Shell, Chevron, Sinopec and Total, but the announcement of the winners has been delayed several times.
The plans were ultimately cancelled in September 2008 because the projects could no longer be completed within the settled timeframe. In January this year 2009, Technip, an Italian-based company, won a contract to build a refinery in Kerbala, and Stone & Webster, part of Shaw Group Inc, won two projects for the redesigning of two plants in Maysan and Kirku.
In May, Foster Wheeler was awarded a $128 million contract for the final design of an oil refinery in the south with a production capacity of 300 thousand barrels per day.
Iraq also signed a controversial deal with South Korea where the former will provide infrastructure such as refineries and generators worth $3.55 billion, gaining some rights to the fields of Basra in exchange. This region concentrates most of Iraq’s crude oil.
The deals signed with major oil companies are service contracts. It is rather unusual for these companies to embark on such projects, which are generally carried out by smaller specialist firms. Large companies generally prefer investments that offer them a stake in the ownership of the oil and thus the possibility for high profits.
According to specialists in oil industry research, the reason behind such actions is that they see these deals as stepping stones towards more profitable projects. All in all, these deals are speeding up the previously sluggish development of Iraq’s oil industry.
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