Turkish energy giant to establish refinery in northern Iraq
A Turkish oil exploration and production company active in northern Iraq plans to establish a refinery with a capacity of 60,000 barrels this year in the city of Koya, near the Taq Taq oilfield.
Genel Enerji, owned by Çukurova Holding, one of Turkey’s largest conglomerates with investments in the automotive, telecommunications, media, textile, energy and information-technology services sectors, is seeking loans for the refinery’s cost of $510 million.
The firm, which has the authority to establish a refinery and conduct oil exploration in the Taq Taq field as a part of its deal with the Kurdish administration in northern Iraq, has prepared a report titled “Midstream Opportunity in Kurdistan” for the refinery investment.
According to the report, which was acquired by daily Milliyet, the refinery is expected to be built in three phases and will cost $510 million. The Regional Kurdish Administration supports investments in order to cover northern Iraq’s oil demand and export oil.
The Taq Taq Petroleum Refining Company, a subsidiary of Genel Enerji, will build the refinery, which will have a daily capacity of 60,000 barrels, exceeding other refineries in the region in terms of both capacity and technology, according to the ownership and strategy section of the report.
Seeking financing
During the two phases, the refinery will have a daily production capacity of 40,000 barrels by 2011 and 60,000 by 2013. The cash to flow following the construction of the first two phases will benefit the investment cost of the third phase, according to the report.
“The deals were signed in 2009. The construction of Phase 1 and Phase 2 will commence in 2010. Within the fourth quarter of 2011, Phase 1 will start production and the construction of Phase 3 will start. Phase 3 will operate at full capacity in the second quarter of 2013,” the report said. “The Kurdish administration in northern Iraq will supply crude oil and the Iraqi government will market the output of the refinery.”
Genel Enerji is reported to be seeking financing for the investment by submitting the report to several financial institutions. The process for the share of revenues is ongoing. The price of oil will be determined in line with the free-market model.
The cost of the operation is $2.75 per barrel.
The company will be exempt from taxes levied by the Regional Kurdish Administration and the central government for the first 25 years. The regional administration will continue paying the company in case of a cease in oil production at Taq Taq, a disruption in transfer or the expiration of stocks. If the firm bears losses, the regional administration will support it.
The Taq Taq Operating Company, jointly owned by Genel Enerji of Turkey and Addax Petroleum International of Canada, is building a terminal with a daily capacity of 1 million barrels near Taq Taq. The terminal investment aims to make transfers to the Kirkuk-Ceyhan pipeline and oil export through trailer-truck loading. The trailer-truck loading station will have a daily capacity of 30,000 barrels. The company is also building a 24-inch pipeline with a length of 64 kilometers to run from Koya to Kirkuk. This line will be connected to the Kirkuk-Ceyhan pipeline for export purposes.
The organization of the Taq Taq Operating Company encompasses a permanent staff of approximately 50 petroleum-industry experts originating from Iraq, Turkey, Britain, France, Canada and other countries. It maintains offices in the Turkish capital of Ankara, Arbil in northern Iraq and within the Taq Taq license area.
The Taq Taq field is located approximately 60 kilometers northeast of Kirkuk and 85 kilometers southeast of Arbil.
Source:Hurriyet Daily News
URL: www.hurriyetdailynews.com/n.php?n=turkish-energy-giant-to-establish-refinery-in-northern-iraq-2010-01-25