The oil and gas scene around the world is full of what is worthy to write about. But I find it difficult to steer away from what is happening, or not happening, in Iraq in this difficult time.

Last week I wrote about the Baiji Refinery, the largest in Iraq and where some fighting is still going on in its vicinity. The reason why I want to stay with this is a report yesterday that government forces now occupy the “petrochemical” plant and are threatening to blow it. The report was later proved to be false and the army is actually somewhere else, in the non-productive zone of the refinery.

The so called “petrochemical plant” is none other than the facility of the Arab Chemicals Detergents Company (Aradet), a joint Arab company set up to produce Linear Alkyl Benzene (LAB) for the detergents industry in Iraq as well as for exports.

Aradet was the result of an agreement between Iraq, represented by the Ministry of Oil, and the Arab Petroleum Investment Corporation (Apicorp), a joint Arab company based in Al Khobar in Saudi Arabia. It was signed in 1981 as a result of a feasibility study of the project and the incentives given by the Iraqi government at the time.

Other shareholders later included Saudi Arabia (10 per cent), Kuwait (10 per cent), the Arab Mining Company (10 per cent), Arab Investment Company (6 per cent), while Iraq and Apicorp each retained 32 per cent.

The plant was designed to produce about 33,000 tonnes of aromatics and a corresponding volume of linear paraffin for the production of 50,000 tonnes of LAB. Half the production was supposed to be for Iraq’s detergent plants and the rest for exports. Therefore, Iraq is the greater beneficiary of the plant, not only as a major investor but as a user as well.

At the time, only Egypt was developing the same, through a smaller project in Alexandria which became operational in 1984. Now there are similar projects in the UAE, Qatar, Saudi Arabia and, perhaps, Algeria. They are probably encouraged by rising demand and the success of the plant in Iraq.


Most successful JV

Aradet is often cited as one of the most successful joint Arab companies established under the umbrella of the Organization of the Arab Petroleum Exporting Countries (Oapec), which was pushing for Arab economic integration through the oil and gas sectors. It was based close to the Baiji Refinery to exploit the synergy between the two plants and to facilitate transfer of feedstock and utilities to the plant from the refinery and to receive in turn some streams that are by-products in the plant.

The plant at the time used the latest and best available technology and the investment was close to $130 million when it commenced production in 1987. In today’s prices I venture to say that the replacement cost of the plant may be close to $400 million.

Of course, Aradet is only a small part of the Baiji Refinery complex but any damage caused by violence and explosions may carry to the rest of the complex and cause undue sufferings for all Iraqis, financially and logistically. The plant also contains some chemicals that in such violent cases may cause a lot of harm even outside the complex.

This is why a number of parties have called for the neutralisation of the Baiji Refinery and its associated plants, but unfortunately Maliki’s answer was to send helicopters gunships which have so far caused three fires inside the refinery and even the private housing of Aradet staff was bombed.

The rallying call to save the refinery and make it operable for all Iraqis is still unheeded. If it materialises, it may be a small step in the search for a solution to the present conflict, which is causing untold suffering and fragmentation of the country. I do not say this only as a specialist who played his role in Aradet over its early years, but as an Iraqi who longs for the unity of the country and its people and for preserving what is an important asset past, now and well into the future.

Even the rest of the shareholders will be disappointed if the Iraqis do not preserve the plant and their rights thereof. I add my voice to the local tribal leaders whom I am told have worked so hard to save the refinery and associated plants and — most importantly — to save lives on both of the conflicting sides.

— The writer is former head of the Energy Studies Department at the Opec Secretariat in Vienna.