Iraq is considering building a $2 billion petrochemical plant and could begin talks with potential international investors in the project this year, the country's industry minister said on Sunday. "We are considering a completely new facility in the central or northern parts of the country," Fawzi Al-Hariri told Reuters on the sidelines of a conference in Dubai.
The plant, which could be 100% owned by private sector firms, would have an annual capacity of one million tonnes of ethylene and derivatives, he said. Hariri said 50% of the envisaged output would be earmarked for export.
The feedstock for the plant would be associated oil field gas that Iraq, an Opec oil producer, is currently flaring, or gas from new field developments, he said. Iraq should make a decision soon on the new plant because development of the regional industry meant that the longer it waited the less attractive investment would be.
Firms in Saudi Arabia, the region's largest petrochemicals producer, plan to spend about $80 billion in the next five years adding capacity on the relatively cheap supplies of gas used in production, a Saudi government official said in June. The investments would raise Saudi output to 15% of the world's total within five years, or double its current level.
Oil majors are eager to gain access to Iraq's oil reserves - the third-largest in the world - although security concerns mean the companies are reluctant to put people on the ground. The security budget of a plant like this could reach up of 40% of the total budget, Hariri said, adding that choosing a location would be influenced by security issues.
Hariri said on Wednesday that Royal Dutch Shell and Dow Chemical were in talks with the government to renovate and expand a chemical plant in southern Iraq at a cost of up to $2.1 billion. Similar talks were also conducted with Chevron, he said on Sunday.
Iraq, which produces most of its crude oil in the south of the country, pumped 2.07 million barrels per day last month, making it the Middle East's fifth-largest producer, according to a Reuters survey this month.
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