Iraq's Kurdish region's plans for building new refineries will not affect Turkey's refined product sales into the area in the near future, experts have claimed.
The Kurdistan Regional Government – KRG – announced Tuesday it will build two new refineries to cope with a fuel crisis caused by Islamic State of Iraq and Levant-led fighters seizing the roads in Mosul on the way to Iraq’s largest oil refinery at Baiji on June 13.
Ashti Hawrami, KRG minister of natural resources Tuesday said: “We have plans to launch two refineries in Dohuk and Garmiyan, but it will take two to three years," adding that the administration wanted to increase the capacity of two existing refineries.
- “Pie in the sky”
Shwan Zulal, Head of Carduchi Consulting and an energy expert, told the Anadolu Agency that the planned refineries are “pie in the sky” as they require subsidies and the KRG has little money for now.
“If oil exports via Turkey accelerate and more cash comes in, they may become a reality, but it will be at least two years before we see any significant increase in refining capacity”, he added.
Zulal noted that new plans would not affect sales from Turkey for now but could pose problems in the long term.
- Trade relations to grow
Dr. Fahrettin Sumer from the American University of Iraq, Sulaimani based in the Kurdish city of Sulaymaniyah said that, as everyone was caught unprepared for ISIL's capture of Baiji, Turkey is not currently able to supply the KRG’s fuel needs.
Fuel transportation capacity from Turkey to the KRG is limited and takes time given the current level of border infrastructure, Sumer adds.
As a result, the KRG is looking for long-term solutions and is aiming to increase its own refining capacity by building additional facilities, says Sumer.
He adds that this might affect fuel sales from Turkey to the KRG negatively in the future given the continuous increase of demand for fuel in both states.
"Nevertheless, Turkey's trade relations with the KRG will continue to grow in the foreseeable future," he emphasized.
The Kurdistan region already has refineries in each of its three governorates but in small capacities.
Kalak refinery near Erbil is operated by Kurdish company Kar Group and has a capacity of 80,000 barrels per day currently, with a planned capacity of 100,000 within this year.
Bazian refinery in Sulaymaniyah is operated by Kurdish company WZA Petroleum and has a capacity of 34,000 barrels per day currently, with a planned capacity of 80,000 within this year.
In addition, at the Tawke field in Duhok, Norwegian company DNO has a topping plant which prepares crude oil to meet export specifications, with a capacity of 5,000 barrels per day.