Iraq targets overseas refineries to boost oil revenue

 Shafaq News/ Iraq is exploring investments in high-capacity overseas refineries to secure steady crude sales and maximize revenues, with a particular focus on fast-growing Asian markets, according to Nizar Al-Shatri, Director General of the State Oil Marketing Organization (SOMO).

In an interview with Asharq, Al-Shatri said 75% of Iraq’s oil exports are directed to Asia, citing the region’s accelerating demand and expanding refining capacities, especially when compared to European and North American markets.

China, India, South Korea, Indonesia, and Malaysia remain Iraq’s top crude buyers.

Al-Shatri explained that investing in foreign refineries would allow Iraq to secure fixed refining quotas, shielding exports from market volatility.

“We aim to work with reputable clients who operate high-capacity refineries in various markets to absorb price fluctuations without affecting export volumes,” he said.

SOMO is currently pursuing long-term partnerships with major refiners across Asia, Europe, the Americas, and several African markets. These deals typically allow Iraq to sell crude at official prices, while benefiting from price differentials during market surges—taking 65% of the profit, with partners retaining 35%. In case of losses, the foreign partner bears the cost.

Al-Shatri reaffirmed Iraq’s commitment to OPEC+ quotas, stating that the country respects its production ceiling—currently set near 4M barrels per day (bpd), though Iraq’s full production capacity is closer to 5.5M bpd.

“This discipline has helped stabilize the global oil market,” he said.

Iraq has, however, expressed past concerns over OPEC+ restrictions, as it seeks to rebuild its economy and expand trade following decades of conflict and sanctions.

Al-Shatri also clarified that condensates and associated gas are included in production figures for some fields to enhance crude quality, but stressed these should be reported separately as they are not technically crude oil.

In 2024, Iraq exported approximately 1.2B barrels of oil, generating nearly $95B—accounting for over 90% of the country’s total budget revenues.

SOMO also utilizes the spot market to generate additional profits. Al-Shatri noted that in one recent year, this strategy brought in $80 million in bonus revenue.

According to the International Monetary Fund, Iraq needs oil prices around $92 per barrel to balance its 2025 budget. Meanwhile, global oil benchmarks such as Brent crude are trading significantly lower, hovering near $65 per barrel—intensifying pressure on public finances.

Founded in 1998, SOMO oversees Iraq’s oil sales and has managed domestic fuel imports since 2003 to fill gaps in gasoline, diesel, kerosene, and liquefied gas supplies.