Iraq has signed a $6 billion contract with Swiss company Satarem to build and operate a 150,000 barrels per day (bpd) oil refinery in the southern province of Maysan, the prime minister said.

Domestic demand for fuel is rising fast in Iraq and other major oil exporters such as Saudi Arabia. Baghdad, which is boosting its oil production, is also pushing ahead with a downstream expansion to end costly fuel imports.

"Today we sign a contract for an important investment project with the participation of the private sector, which will contribute towards filling the need of the country for oil products," said Prime Minister Nouri Al-Maliki at the signing ceremony.

The refinery is one of four new projects designed to increase refining capacity by around 740,000 bpd and revamp Iraq's oil sector, left dilapidated by decades of war and sanctions.

Iraq's Oil Ministry plans to add one 150,000 bpd refinery in each of the cities of Kerbala and Kirkuk, as well as another 300,000 bpd facility in Nassiriya.

That would raise Iraq's refining capacity to around 1.5 million bpd from the current 650,000-750,000 bpd.

Iraq's capacity to refine fuels like diesel and gasoline has been hit by underinvestment, forcing it to buy imported fuels to fill the widening gap between supply and domestic demand.

"The Iraqi oil ministry's plan for 2014 is to speed up building new refineries to absorb the country's production increase," said an official at the ministry. - Reuters