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Iraq Petrochemicals & Plastics Sector
Global Arab Network - David Morgan
Iraq has the potential to develop a dynamic petrochemical and plastics industry. As is widely known the country has enormous oil and gas reserves, assets that represent the cornerstone of a strong downstream petrochemicals and plastics sector.
The significant potential of Iraq’s downstream petrochemical industries has been limited by the country’s long isolation from world markets, but with investment the sector can be revitalised, according to the Iraqi National Investment Commission.

Demand for petrochemical products is large, both within Iraq and from abroad.  The basic infrastructure already exists and the industry can be rehabilitated and expand on the existing resources.
The already explored area of the oil and gas industry in Iraq is primarily in two areas where oil fields are most numerous and productive: that is, around the city of Kirkuk and adjacent areas in the north, and around the city of Basra and its surrounding regions in the south. Both these areas could become anchors for a revitalised petrochemical and plastics industry in the future. The large refinery in Al Dowra, Baghdad, has considerable potential for the petrochemicals industry.

Kirkuk’s oil industry has been focused on extraction, some refining (like degassing and cold-stripping), and export via 2 pipelines via Ceyhan in Turkey and Syria. Kirkuk’s production, up to 700,000 barrels a day, is controlled by the Northern Oil Company. Some of Kirkuk’s oil is shipped by pipeline to the refinery in Bayji, in Salah Al Din province, 50km away. The Bayji refinery is the largest in Iraq, with a processing capacity of 310,000 barrels a day. The refinery produces gasoline, kerosene and diesel fuel, engine oil and lubricants. Bayji also includes a large fertilizer plant capable of producing urea using natural gas as a primary input, which is part of the Ministry of Industries and Minerals.

The Bayji hub has been subject to frequent production disruptions, many of which are caused by the rundown state of its northern pipelines and security issues.
Kirkuk is an ideal location for developing new capacity in other petrochemical or plastics production. The raw materials are plentiful, and Kirkuk and Bayji are transportation hubs for both the rest of northern Iraq and the surrounding region.

The southern oil regions are anchored by Basrah and the ports. In Basrah, the State Company for Petrochemical Industry (SCPI) operates the country’s largest petrochemical processing facility, plus a fertilizer company. However, much of the infrastructure of the plants is now outdated. Throughout the 1990’s, the Basra complex lacked access to new technology, spare parts or investment. Investment is needed to transform the Basra complex into a state-of-the-art facility.

Existing infrastructure makes Basra an obvious location for the industry to expand. In addition, Iraq’s primary deepwater port is nearby at Umm Qasr. Basra is also linked by rail and expressway to Baghdad, with the Al Daura Refinery and northern Iraq.

The demand for petrochemical products in Iraq is substantial. The range of possible products that could be produced in Iraq will find a ready market, whether it be fuels, lubricants, plastics, fertilizer or chemicals in both international and local markets.

Examples of growing demand are below:
Production needs (PVC pipes, gaskets and injection moldings)
The Iraqi National Investment Commission believes that the construction industry will be booming for years to come. For example, the Ministry of Reconstruction and Housing estimated a domestic need to build three million new homes by 2015. In addition, the World Bank estimated that Iraq will need $18 billion in infrastructure projects before 2007. With this high level of construction happening in Iraq, PVC pipes and other plastic building components will be in high demand.

The Ministry of Oil plans to double refining capacity by the end of 2010, which points to a sizeable increase in demand for soft and hard plastics used in refinery facilities.

Product packaging
As domestic production of foodstuffs and other products increases and diversifies, product packaging will have to meet this increased demand. Boxes, crates, packaging, film, tape and additional products made from plastics and other derivatives will be in demand.

There is great potential to increase production in the agricultural sector. As agricultural production expands, the need for fertilizers will need to keep pace. There are also export opportunities for fertilizers. Agricultural plastic film used to increase crop yield can also be produced in the Basra petrochemical complex; demand for the product should grow in tandem with demand for fertilizer.

Basic Plant and Port Infrastructure
A large petrochemical complex in Basra includes several plants, producing propane, butane, liquefied natural gas, ethylene, high- and low-density polyethylene, chlorine, PVC, and hydrochloric acid. The seven-unit complex is operational and an independent review identified the potential for ISO 9000 quality control certification.

Basra offers significant port capacity for exports and would allow for industrial clustering as has occurred elsewhere in the world. Basra’s location and superior access to crude oil suggest such a strategy.

The plant will be assisted by the implementation of plans by the Ministry of Transport to develop a huge deep-water port to the south of Basra with a design capacity of 100 berths, for which bids have been issued. The new port will greatly increase access to the Gulf. The project includes a rail link to Khor Zubayr, and a highway and underwater tunnel along the border with Kuwait; plans to further develop Khor Zabayr and Umm Qasr ports are also underway.

This report is based on data provided by the Iraqi National Investment Commission. It appeared in the Arab-British Chamber of Commerce fortnightly bulletin, Arab-British Business. 

Global Arab Network
First published in the Arab British Business Bulletin

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