It is very hard to be part of a big success story only to see it in dire difficulties many years later. It is even harder when the road to recovery is so clear but hardly anything is being done about it.

I was invited to speak at the 6th ICIS Middle Eastern Base Oils and Lubricants Conference, which was held last week in Dubai and attended by over 200 specialists to discuss the latest developments in a major sector of the oil industry that affects everyone from car owners to airlines and factory managers.

Sadly, my presentation on the prospect of the industry in Iraq brought into the open an important issue that is hardly mentioned even in the specialist oil media.

Iraq recognised the importance of lubricants early on in its development. The first modern oil refinery was commissioned in 1955 at Daura in the vicinity of Baghdad and its lubricating oil plant closely followed in 1957.

Immediate success

It was probably the second plant in the Arab world after a similar and older plant in Egypt.

It had a capacity of 25,000 tonnes a year, large by standards of that time, and was an immediate success as it depended on Kirkuk and Basra crude oils, which are known to be excellent for lubes.

As Iraq's economy developed and built on the success of the first plant, many expansions followed with the addition of new plants in Daura, Basra and Baiji — such that the total installed production capacity reached almost half a million tonnes per year at the end of the 1980s, sufficient for domestic consumption with plenty to export to neighbouring countries.

The new plants incorporated the latest processing technologies which were accompanied by a similar effort to blend and formulate many grades of finished products according to respectable international standards.

In 1990 Iraq produced close to a quarter of a million tonnes after its successful commissioning of its latest plant in Baiji, which allowed the commencement of exports to neighbouring countries.

Then came the war on Iraq in 1991 and the plants along with other refinery units were heavily damaged and it took heroic efforts to repair them with the exception of one line in Baiji which required embargoed equipment.

The refinery engineers and workers were joined by people who came out of retirement to support the work at the time.

During the years of the UN embargo on Iraq, the plants sustained some deterioration due to the lack of spare parts and chemicals.

Yet production in 2002 was close to 180,000 tonnes a year and probably was better on the eve of the invasion and occupation of Iraq in March 2003.

In that last war there was no physical damage to the plants though some damage was done overall to the refineries and other oil industry facilities by the ensuing chaos.

Six and a half years have passed since the so-called "liberation" of Iraq and billions of dollars were supposedly spent in the rejuvenation of the oil industry and yet the lubricating oil plants are going from bad to worse.

Production in 2008 was just over 20,000 tonnes a year, a fraction of the available capacity and almost similar to the level of the late 1960s.

Current domestic demand is largely met by tens of thousands of tonnes of imports conducted by the private sector without any control on the quality of the imported lubricants.

The damage is huge to the economy and to the idle plants at a time when Iraq should have been exporting lubricants in a demanding market.

For this industry to recover it is important to have a wide-ranging effort aimed at rehabilitation and thorough maintenance of all the facilities with a view to modernising the plants to incorporate new innovations in processing or equipment.

In this regard it may be desirable to cooperate with well-known international companies to formulate and market the brands needed in Iraq and to export potential surpluses.

Control of the quality of imports must be a priority in addition to a review of low domestic prices to reflect quality and conserve lubricating oils and protect the environment.

While my presentation was well received in the conference, I was astonished by the advances made in developed countries in this industry which means that the Iraqis must double their efforts to catch up.

Over 50 years have passed since the successful establishment of this industry in Iraq and the large scale disregard of the last few years must stop for the benefit of all Iraqis and the region.

 

The writer is former head of Energy Studies Department at the Opec Secretariat in Vienna and former president of Iraqi refineries