Oil & Gas

Iraq proposes moving one of its oldest oil refineries

January 9, 2025, 4:13 PM

An Iraqi worker looks at the Shuaiba oil refinery in southwest Basra; Iraq is on a drive expand and update its refineries to meet a steady rise in demand — An Iraqi worker looks at the Shuaiba oil refinery in southwest Basra. Iraq is on a drive expand and update its refineries to meet a steady rise in demand

Daura refinery in inhabited area
Below environmental standards
Cost of moving could be $4bn

Iraq is considering dismantling one of its oldest oil refineries and moving it outside the capital Baghdad for environmental reasons, but it faces parliamentary objections because of the high cost of the removal.

A member of parliament’s oil and gas committee said that dismantling and moving Daura refinery to a remote location outside Baghdad could cost nearly $4 billion and equipment could sustain damage in the process.

Bahaa Al-Nouri was quoted by the official Iraqi news agency on Wednesday as saying the cabinet has received a proposal to transfer Daura refinery instead of updating the facility on the grounds it is located in an inhabited area.

“This is a very old refinery despite continuous updating and development projects. The refinery has remained far below environment[al] standards,” Al-Nouri said.

“The proposal submitted recently to the government to move the refinery to a location outside Baghdad poses a big challenge because it could cost $3 billion to $4 billion and the equipment could sustain damage during the process.

“I believe such a move is impractical for the time being,” he said.

Al-Nouri did not mention who made the proposal but Iraqi officials said in 2024 that the parliament’s health and environment committee was planning to request the refinery’s removal to an uninhabited location.

The sprawling Daura oil refinery was built in the southern suburbs of Baghdad in 1953 and commissioned in 1955. It had a designed production capacity of more than 100,000 barrels per day but is now producing nearly 80,000 bpd.

Officials said that the health and environment committee planned the removal request on the grounds the current location was not inhabited when the refinery was built.

“A large number of factories in Baghdad are not environment-friendly and are causing pollution, including Daura refinery,” Dhiya Al-Hindi, a member of the Iraqi parliament, said.

“I believe there is a need to move refineries and other polluting factories outside cities after Iraq officially ratified the Paris agreement on climatic change in 2021.”

Opec-member Iraq, which controls the world’s fifth-largest proven oil deposits, has been locked in a post-war drive to expand and update its refineries to meet a steady rise in demand.

According to the oil ministry, such projects boosted the Arab country’s refining output capacity by nearly 360,000 bpd in 2023-24.

About 150,000 bpd were added through expansion of refineries in north Iraq, while development projects added about 70,000 bpd in the south and 140,000 bpd in the central Karbala province.

Officials said early last year that refinery rehabilitation projects would boost Iraq’s refining capacity to 1.26 million bpd at the end of 2024. Capacity is expected to surge after the completion of new refineries.