British oil major BP has signed a deal with Iraq to build a new terminal at the southern port of Khor al-Zubair, a move showing the Opec-member is seeking the help of international oil firms to upgrade its outdated infrastructure.
A spokesman at the General Company for Ports of Iraq, told Reuters the company had signed a five-year contract with BP this week to build a new terminal replacing an outdated one and that the company had officially taken over the site Tuesday.
BP declined to give financial details of the contract.
"BP will help Iraq build an advanced terminal to receive refined oil product shipments and also to export products in future," Anmar al-Safi said. "BP will pay around $7 for each cubic meter of imported and exported refined products through this terminal."
Iraq relies on imports to meet demand for oil products such as gasoline as its own refineries struggle, and more than 1.5 million tonnes of refined products are delivered over a year, which could generate billions of dollars for BP over the period of the terminal contract.
In 2009, BP and China's CNPC signed a service contract with Iraq to develop the Rumaila field, the workhorse of Iraq's oil industry which has estimated reserves of 17 billion barrels and currently produces around 1.35 million bpd - more than a third of Iraq's total output of around 3 million bpd.
The contract was one of a series awarded by Iraq to foreign firms that could one day more than quadruple its oil output capacity to 12 million barrels per day, rivalling oil giant Saudi Arabia.
"This is an important step forward for BP, we are working with the Ministry of Transport in Iraq to help meet the country's demand for refined oil products," said Paul Reed, CEO of BP's integrated supply and trading business.
A BP spokesman said the initial phase to build the new terminal at Khor al-Zubair would involve using an existing import facility and improving efficiency to bring in higher volumes of oil products.
"The facility will be constructed over a number of phases and we expect that imports will commence in 12 to 18 months' time," a spokesman for BP said.
Neglect and under-investment, combined with red tape, corruption and bureaucracy have left Iraq's southern ports near Basra ill-equipped to deal with the demands of oil majors trying to pour tonnes of equipment into Iraq and limit the capacity of terminals used to unload fuel imports purchased to meet growing domestic need.-Reuters