KBR to Execute Two Refinery Contracts for Iraq's Oil Ministry

Researched by Industrial Info Resources (Sugar Land, Texas)--Iraq's Oil Ministry has awarded two contracts to global engineering services company KBR Incorporated (NYSE:KBR) (Houston, Texas) for the proposed 150,000-barrel-per-day Maysan refining complex. The ministry signed the contracts with KBR through Southern Refineries Company (SRC) (Basra, Iraq). The first contract will include basic engineering and licensing work for the fluidized catalytic cracker (FCC) facility, while under the second contract, KBR will provide engineering services for the Solvent Deasphalting (SDA) unit. Work on the projects is expected to begin immediately. The FCC unit will produce gasoline, and the SDA will help in the removal of residual oil that cannot be converted into motor fuel.

KBR will provide technology licensing for the 45,000-barrel-per-day SDA unit and the 47,500-barrel-per-day FCC facility. The SDA unit will use KBR's patented Residuum Oil Supercritical Extraction (ROSE) technology. This solvent extraction process uses residuals for feed and produces several high-grade products. The procedure also produces deasphalted oils, which are used as feed in the FCC unit. The technology is gaining popularity worldwide, as it helps in the reduction of capital costs and can process a variety of feedstocks. The FCC unit for the Maysan refining complex will be supplied through a joint marketing deal between Exxon Mobil Research and Engineering Company (Annandale, New Jersey), a subsidiary of Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas), and KBR.

Earlier, engineering services company Shaw Group Incorporated (NYSE:SHAW) (Baton Rouge, Louisiana) secured contracts to undertake the front-end engineering and design activities for the Kirkuk and Maysan refineries. Both refineries are part of Iraq's development program to augment oil-refining capacity and reduce imports. Despite having the world's third-largest oil reserves, Iraq is struggling to develop this sector. Years of war with Iran and the subsequent U.S.-led invasion in 2003 ravaged the country's refining infrastructure. Many refineries built in the 1970s and 1980s are in a derelict state. Presently, Iraq operates eight refineries with a combined processing capacity of 2.3 million barrels per day, but is not producing at the installed capacities.

As part of its refinery development initiative, by 2015-16, the country proposes to boost crude oil capacity from 2.3 million barrels per day to about 12 million barrels per day. With an estimated investment of $20 billion required to develop this sector, Iraq has signed deals with several international energy firms to undertake exploration, production and to set up refining complexes. As part of the augmentation program, the country plans to refurbish the Baiji, Basra and Doura refineries and set up refining facilities at Kerbala, Kirkuk, Nassiriya and Maysan. While Maysan and Kirkuk will each have a refining capacity of 150,000 barrels per day, Nassiriya and Kerbala will be built to process 300,000 barrels per day and 140,000 barrels per day of crude, respectively.

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