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Low product prices as well as violence are preventing Iraq from attracting the foreign investment urgently needed to overhaul its refining capacity.
Iraq needed to upgrade existing refineries and expand overall refining capacity even before Islamic State (IS) Jihadists destroyed the country’s largest refinery at Baiji. As with elsewhere in the Gulf region, Iraq’s state-owned refineries have long had to balance investment needs with an inability to boost revenues because of heavily subsidized products prices. In Iraq the problems are exacerbated by years of underinvestment and Jihadist attacks in many parts of the country.
The CWC Iraq Petroleum 2015 conference in London this week heard that the problems of Iraq’s refining sector are not getting better. Adnan Janabi, a former senior executive at state oil firm INOC, told the conference that Iraq’s entire oil industry is characterized by bureaucracy and long delays. In the downstream sector, unfeasibly low products prices are not only encouraging inefficiency but also corruption.
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