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Iraq to invest $4 billion in oil infrastructure
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Trade Arabia - [9/7/2006]
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Iraq plans to invest $4 billion to build oil refineries and improve ageing infrastructure, Finance Minister Bayan Jabor said. 'Four billion dollars will be allocated to the Oil Ministry to build refineries and improve infrastructure,' Jabor told a news conference.
Iraq has the world's third-largest known oil reserves, but sabotage attacks, corruption and old infrastructure has crippled the sector and caused a severe domestic fuel shortage.
Jabor, who said the spending would come from a planned budget bill for 2007 of about $33 billion, did not say if the investments were aimed at increasing export levels or improving domestic supplies of fuel.
Iraq's oil minister, Hussain Al Shahristani, said earlier that Baghdad planned to raise oil production to 3.0 million barrels per day (bpd) before the end of 2006.
An Oil Ministry official said the ministry hoped to increase domestic production of petrol in its refineries at Basra, Shueyba, Doura and Baiji to 11 million litres per day by the end of the year.
Iraq currently refines eight million litres of petrol per day, way short of a domestic demand of 22-23 million litres per day.
In a move aimed at easing gasoline shortages and reducing smuggling, Iraq's parliament has approved a law that authorises private companies to bid for import licences to supply fuel direct to the open market.
Until now, all oil imports have been conducted by the State Oil Marketing Organisation (Somo), which is also responsible for the sale of Iraqi crude.
Reforming the energy sector is the cornerstone of Iraqi efforts to revitalise the economy. The country is also weighing a new and potentially divisive hydrocarbons law.
The Iraqi government wants to create a comprehensive new set of rules to establish clear investment guidelines in the oil sector, restructure the state oil company and manage foreign exploration partnerships. But government officials have said the plan will take months to complete.
Last week, the government said it would double to $416 million its monthly spending on fuel imports.
Smugglers who siphon off cheap fuel have worsened shortages, forcing Iraqi motorists to queue for hours or pay much higher black market rates.
Fuel prices have soared as the Iraqi government phases out subsidies under an International Monetary Fund deal, angering many Iraqis used to cheap oil.
Before the 2003 invasion, Iraq produced just under 3 million bpd and exported around 2 million bpd.
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