A consortium consisting of four South Korean construction majors - Hyundai Construction, Hyundai Engineering, GS Construction and SK Construction - has won a US$6.04bn deal to build the Karbala Refinery Project in Iraq
The consortium won the bid from Iraq's State Company for Oil Projects (SCOP). In a regulatory filing issued by Hyundai Construction and GS Construction, the plant will produce 140,000 bpd of crude oil in Karbala, which is situated about 120km south of Baghdad. The construction will last four-and-a-half years, but neither firm mentioned when the project would begin.
The Karbala Refinery Project, which will have four refineries, will produce liquefied gas, petrol, gas oil, fuel oil and jet fuel to serve growing domestic needs. The project forms part of Iraq's plans to expand its economy, which will include the construction of new power plants and refineries.
The two Hyundai subsidiaries have a combined 37.5 per cent stake in the project. GS Construction has also claimed 37.5 per cent and SK Construction 25 per cent. South Korean firms have stepped up efforts in recent years to tap into the oil-rich Middle East region, seeking to build and upgrade energy infrastructure and homes.
Iraq’s monthly oil production in January was 3.05 million bpd, according to Bloomberg data. Findings from a research paper by Luay Al Khateeb, visiting fellow at Brookings Institution, claims that much of Iraq’s gas is associated with oil production – unlike other Middle Eastern countries. This makes gas production cost-effective and competitive in regional markets as the development cost of gas is linked to capturing, processing, and transportation, with no cost required for exploration and production.
However, due to the lack of infrastructure facilities, 55 per cent of current gas production is flared, leaving very little to feed the deprived national grid and industry.
