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The oil market has been affected by financial market challenges, inflation and the war in Ukraine. Still, the Arab Gulf states remain resolutely optimistic, as evidenced by plans for new refineries and storage being drawn up in Iraq and the United Arab Emirates.
This week, Iraqi Oil Minister Hayan Abdul Ghani said Baghdad had invited investors to build seven new refineries across the country. Ghani also said that tenders for three refineries had started today, while quotations for the other three refineries were expected to open on April 2. Ghani also reiterated that the new investment “constitutes a shift in the government’s strategy to encourage foreign investment in refining and open new horizons to international companies and the local private sector in the industry”. The first three refinery projects include a 50,000 bpd refinery in southeastern Maysan province, a 70,000 bpd refinery in northern Iraq’s Nineveh province and a 30,000 bpd refinery in Basra, the sources said. factory. The April 2 offers were for a 50,000 bpd refinery in Nadziqar, a 100,000 bpd refinery in Wasit (eastern Iraq) and a 70,000 bpd refinery in Muthanna (southern Iraq) factory. The seventh refinery project plans to build a 70,000 bpd refinery in the western province of Anbar.
The refinery expansion strategy comes as Iraq continues to struggle to comply with its OPEC quotas. Iraqi state oil marketer SOMO reported that Iraqi production was around 4.34 million b/d in February 2023, a slight change from the previous month but still 92,000 b/d below OPEC’s official quota level. Production levels in January 2023 are also around 100,000 b/d below OPEC’s production quota, compared with 4.43 million b/d in December 2022. The current low production is mainly due to ongoing maintenance work at the 400,000 bpd West Qurna 2 field. However, this shortfall contradicts the official statement in January 2023 that other Iraqi fields would be able to make up for the decline in West Qurna 2 production. RELATED: Here’s how gas prices performed under the last four presidents
A more positive development this month was the rapprochement between Baghdad and the autonomous Kurdish region, which has been feuding over oil revenues from oil operations in northern Iraq. Baghdad and the Kurdish regional government have reached an agreement to end the Baghdad-Erbil dispute over oil revenues from the Kurdistan region, according to Iraqi Prime Minister Mohammad Shiite Sultan. Al Sudani told the media that Kurdish oil revenues would be deposited into a single account that would be controlled by both the prime minister and the Kurdistan prime minister.
and the stakes in northern Iraq very big. Often referred to as one of the last oil frontiers, the cost of extracting oil is still the lowest in the world at about $2-3 per barrel, comparable to Saudi Arabia, and the reserves are huge.
Genel, a key partner to the oil and gas industry in the Kurdistan region, reported total end-2022 2P reserves of 327 million barrels in its Tawke license (in which Genel holds a 25% working interest). Production in 2022 is 39 million bpd, a technical increase of 9 million bpd, according to DeGolyer and MacNaughton international oil consultants.
By implementing and observing the performance of the first phase of the Tawke Field Enhanced Oil Recovery (EOR) project, 11.7 MMbbls of the 23.3 MMbbls were transferred from 2C resources to 2P reserves.
Meanwhile, in its Taq Taq concession (44% working interest, joint operator), total 2P reserves of 24m barrels by end-2022 (26m barrels end-2021) based on independent assessment by McDaniel & Associates , which previously produced 1.6 million barrels.
In its Sarta concession (Genel 30% working interest, operator) Genel estimates total 2P reserves at 9m barrels at end 2022 (32m barrels at end 2021), with 1.7m barrels produced after appraisal results and trial production.
While Iraq looks to boost its downstream industry, the UAE’s plans to establish a global oil hub in Fujairah look brighter. Emirate hubs are under pressure due to rising Russian oil inflows, which is straining available storage and shipping options. Russian oil has been banned from European markets and Moscow has redirected its flows to Asia, offering Fujairah and other Emirati parties an opportunity to take advantage.
Maha Abdelmajeed, commercial manager of VTTI Fujairah Terminals, told the Fuel Oil Forum (FUJCON) that the terminal has seen an influx of Urals and naphtha and he expects this to continue in the near future. However, existing storage tanks are full, indicating that Fujairah’s water storage capacity has reached 1.1 million cubic meters. Vessel data for 2022 shows that Fujairah has taken delivery of about 12,500 vessels, an increase of about 10% in total. Fujairah Port’s BD Manager, Martijn Heijboer, expects healthy demand for new traffic and storage needs. In addition, Fujairah is about to open a dry bulk export facility, which will add about 18 million tonnes of aggregate handling capacity at Dibba. Methanol and LNG are projected to hold the largest market share of alternative marine fuels in Fujairah by 2050, followed by biofuels and ammonia. With these developments, Fujairah is poised to become one of the largest refueling hubs in the world.
Written by Cyril Widdershoven for Oilprice.com
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