April 8, 2009 / 10:54 PM / in 9 years

Iraq invites Brazil Petrobras to build oil refinery

RIO DE JANEIRO, April 8 (Reuters) - Iraq’s government on Wednesday invited Brazil’s state-run oil company Petrobras (PETR4.SA)(PBR.N) to build an oil refinery with a daily capacity of up to 200,000 barrels in the Middle Eastern country.

Brazil and Iraq have created commissions to discuss the project that could include oil exploration and production, said Iraqi Planning Minister Ali Baban.

“They (Petrobras) said they would consider the proposal seriously,” Baban told reporters after a meeting with businessmen in Rio de Janeiro. The invitation was extended to other companies.

Iraq’s current daily oil output totals 2.4 million barrels. Domestic consumption is at 500,000 barrels per day and the remainder is exported, Baban said.

“We need a refinery for all kinds of byproducts, mainly gasoline,” he added.

The global crisis and internal conflicts in Iraq could be hurdles for the project, Baban said, but he added that local huge reserves and low extraction costs are attractive for international companies to invest in the country.

The cost to extract oil in Iraq is at between $3 and $5 per barrel, Baban said. Total oil reserves in Iraq are estimated at 180 billion barrels, most of them onshore.

Petrobras President Jose Sergio Gabrielli said later that the company would study the proposal. Petrobras used to produce oil in Iraq in the 1970s, but had to return the fields. (Reporting by Rodrigo Viga Gaier; Translated by Inae Riveras; Editing by Christian Wiessner)

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