ARBIL: Fed up with the daily violence of Baghdad, veteran Iraqi oilmen have moved north to autonomous Kurdistan to help build a strategic refinery that will meet the region's need for fuel.

Autonomous since 1991, Kurdistan runs its own government and armed forces but relies on the central government in Baghdad for a percentage of Iraq's oil revenues. Yet the region is short of key products such as diesel and kerosene, currently receiving only 15,000 barrels per day (b/d) of supply from Iraq's refineries, Kurdish officials say.

That is set to change thanks to a major expansion of the KAR Group-owned Kalak refinery just outside the Kurdistan capital Arbil. Its capacity is set to rise to 100,000 b/d from 40,000 b/d by the end of this year.

A further 85,000 b/d will be added by the middle of 2014. This two-phased extension, estimated at $1bn, is managed by former senior Iraqi oil officials now working at privately owned KAR Group - an energy services company based in Arbil.

Abdullah Al Zubaidi, a former director general at the powerful South Oil Co in Basra, was first to join. He recruited his peers, among them Najem Hadi, who is now project manager at the Kalak refinery. "It's safe over here. I retired from my job and had to do something to keep going," said the 68-year-old Hadi, who ran the Basra refinery in southern Iraq for two decades.

"With KAR, we're working for the private sector. Things get done quickly and easily. They know how to work." When Hadi moved to Kurdistan in 2007, there was no refinery in the rocky desert of Kalak. KAR won a contract to complete the original 20,000 b/d plant in 2008 and finished the job in less than a year. A further 20,000 b/d was added in 2010.  At 40,000 b/d, KAR's Kalak is already Kurdistan's biggest refinery, covering 50 percent of local demand.

The nearly completed expansion will have it cranking out 100,000 b/d of products such as LPG, petrol, fuel oil and naphtha by the end of the year - enough to cover 70 percent of demand.

A further 85,000 b/d is due to be added by the middle of 2014, taking overall capacity to 185,000 b/d and satisfying the region's consumption. "Anything I need to keep the refinery running, I can get quickly and easily - that's very important," said Hadi. "Working on the government side (in Iraq), sometimes you don't get the money or you have to get approvals at the highest level. Here I can take the decision myself."

Progress has come despite a long-running feud between Kurdistan and the central government over oil and land rights.

Reuters

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