US Company to Help Expand Iraqi Refinery

BAGHDAD (AP) -- Iraq's Oil Ministry has signed a contract with the Colorado Industrial Construction Services Co. to help expand a refinery in Najaf, south of Baghdad, an official said Wednesday.

The $85 million contract is designed to increase the refinery's current capacity of 20,000 barrels of oil per day by roughly 10,000 barrels per day, a senior ministry official said.

"We are expecting the work to be done in one year or one year and a half," the official told The Associated Press, speaking on condition of anonymity because of a lack of authorization to release the information.

The Colorado-based company did not respond to telephone calls seeking confirmation.

The refinery, about 100 miles south of Baghdad, was constructed in October 2006 to help meet increasing needs in central Iraq for petroleum products, including kerosene.

The U.S. company will build a third production unit, the official said.

Last week, the oil ministry inaugurated a second production unit at the facility and pledged more refineries would be built across the country, including in Nasiriyah and Karbala, two other cities in the predominantly Shiite south.

Together the new refineries will be able to refine more than 450,000 barrels daily, it said.

Iraq has the world's third-largest known crude oil reserves, with an estimated 115 billion barrels, but it suffers acute shortages in petroleum products as most infrastructure has been damaged or destroyed after years of U.N. sanctions and then five years of war.

Iraq's three main oil refineries are running at roughly half the 700,000 barrels daily capacity they maintained before the U.S.-led invasion on March 20, 2003.

The shortfall has forced Iraq to turn to imports from neighboring Iran, Kuwait and Turkey.

The country has been forced to import about 8,000 tons each day, or about 60,000 barrels, according to figures released last month by the State Oil Marketing Organization.

Insurgents frequently attack pipelines, hoping to rob the government of oil revenue.

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