Refineries take years to develop and construct and they contribute to the local and national economy of any country through decades. Yet it does not take much to inflict great damage to these plants or even total destruction.
If this happens by operational accident or fire then it is sad, but within the nature of business. However if damage is the result of conflicts then it makes many hearts bleed, especially those of the staff at the refinery and the immediately affected.
The Qayarah refinery in the province of Nainawa in Iraq is the latest victim of a Daesh occupation and the battle to dislodge them from the town, 70 kilometres south of Mosul and 300 kilometres north of Baghdad.
In terms of volumes, the refinery is small and essentially producing road asphalt. Its history goes back to the 1950s when the first unit was installed. But two expansions and renovations in the 1970s took its overall capacity to 14,000 barrels a day.
The refinery produced road asphalt for the northern region of Iraq by processing heavy and high sulphur crude oil, which is over 50 per cent asphalt. The heavy diesel product is of inferior quality and was used in the old days as locomotive fuel and later as fuel oil for a diesel power plant.
For years the naphtha product was burnt in a pit just outside the refinery causing heavy environmental problems. It was later treated and exported to Turkey by trucks.
The refinery was heavily damaged by warplanes in 1980 during the Iraq-Iran war and it took three months working round the clock to repair including additional modifications and renovations.
In late October, the Iraq Oil Report visited the refinery and reported extensively on the damage caused by the Daesh occupation and the ensuing battle. It said that the refinery “is now a charred carcass of deformed steel” and “bullet holes now perforate most parts of the refinery, from storage tanks, to processing units, to the walls of administrative buildings. Fierce fires have contorted and ruined the pipes that once functioned as arteries connecting the parts of the complex.
“Many of the storage tanks have exploded, while others sit crumpled like giant, heat-mangled beer cans” — a true reflection of the photographs that accompanied the report.
The Ministry of Oil is reported to have pledged to reconstruct the refinery and Oil Minister Jabbar al-Luiebi vowed to “speed up rehabilitation” while workers cleared the rubble. This is good news and perhaps a good start.
But in the absence of a detailed technical assessment it is difficult to see the best option to be followed. The plant manager Ahmad Mohammad Hazah said that “within six months they could bring a small unit online capable of processing about 4,000 barrels per day [bpd] of crude.” This is perhaps one production line out of the original three.
It has to be said that Iraqi personnel are experienced in doing such repairs given the simplicity of the process equipment in Qayarah. But the volume of the damage and the supply of some equipment may require assistance from specialised contractors. Twenty out of 23 storage tanks need to be replaced and reconnected to the process plants.
Apparently, there was an expansion programme of adding two units in 2013, but these were completely destroyed by air strikes, according to the plant manager.
As small as it is, the Qayarah refinery is very important for asphalt production. Iraq’s asphalt production capacity is between 1 million to 1.2 million cubic meters a year. Qayarah’s capacity is 330,000 cubic meters a year.
But now that Baiji and Qayarah refineries are out of operation, available capacity is no more than between 560,000-660,000 cubic meters a year from Daura, Basrah and Nasirya refineries if they are at full capacity, which is not the case.
In 2013 and the first half of 2014, asphalt production was close to 800,000 cubic meters a year, which is probably optimal in normal circumstances. But after the war with Daesh is over, the assumption is that reconstruction of roads, streets and bridges will start in earnest and much more asphalt is needed.
Therefore, other options of increasing asphalt production should be considered. At least 250,000 cubic meters a year can be installed in Samawa to replace the units destroyed in the war of 1991.
Similar projects may be considered in other refineries provided they can be contracted at an expedited pace and outside of the bureaucracy of normal government procedures. This will give Iraq a chance to improve the asphalt quality as well.
The Iraq Oil Report said: “Ruined by war, Qayarah refinery could rise again.” Let us hope so.
The writer is former head of the Energy Studies Department at the Opec Secretariat in Vienna.