The UNJLC Iraq Fuel Bulletin aims to provide a clear and concise periodic overview of the situation as it exists in Iraq with regards to fuels and the oil industry. It focuses on the availability of fuels, particularly as they affect the welfare of the populace and related humanitarian work. It further seeks to identify major issues for the humanitarian community and other interested parties, to provide relevant background and constructive recommendations on current issues, and to alert responsible parties to emerging issues in the crisis so that they may be addressed in good time.

Prior to the events of August 19th, the UNJLC Iraq Fuel Planning Team had dedicated representatives in Baghdad, Basra and Erbil. Several of these personnel have been temporarily evacuated from Iraq until the security situation improves but continue to operate from within the region. UNJLC Head of Fuel Planning may be contacted at info@unjlc.org.

• Distribution: Light Fuels
• Liquified Petroleum Gas (LPG)
• Basra refinery
• Sabotage: Cutting the Flow

Distribution: Light Fuels

A further factor that has positively affected distribution is the regular movement of fuel products convoys, especially in the area south of Baghdad, down to Basra. This has ensured delivery to other densely populated areas outside Baghdad such as Diwaniya and Hilla. The improved stability of electrical power from the national grid to the middle and southern areas has also reduced the demand for diesel and gasoline for small domestic and neighbourhood generators. Few, if any power outages have been reported in recent weeks for cities such as Hilla and Basra.

As an indication of the availability of light fuel products during the past fortnight, it has been reported that most vehicles can refuel with gasoline within 15 minutes. The same is not so for diesel; although it is available, it is harder to obtain.
An important development over the last month has been the implementation of a plan by the Coalition, in conjunction with the Ministry of Oil, to establish reserves of fuel products sufficient to overcome shortages from unforeseen delays in imports, technical failures in refineries, or from the effect of sabotage to pipelines carrying crude oil to refineries or refined products to depots. The plan seems to aim to sustain reserves of between 15 and 30 days future consumption for various types of fuels.

Apart from gasoline and diesel, kerosene, used as a home heating fuel for most Iraqi low-to-middle income families, is now experiencing the expected seasonal high demand. Kerosene prices are still high during in most Iraqi cities, although generally lower in the south where the winter is milder, and higher in the north. Supply in the north has been greatly assisted by the reluctance of Turkish truck drivers to risk the dangerous drive between Baiji and Baghdad. Conversely, this has adversely affected supplies in Baghdad, driving up prices there. This has been aggravated by low levels of production in recent weeks from Daura Refinery, the only production plant in the capital. With an official kerosene retail price of ID10 per liter, the black market price is up to thirty times this in Baghdad. Fortunately, the onset of winter has not been as quick or as harsh as in previous years, so demand has been more muted than expected.

Liquified Petroleum Gas (LPG)

Given the problems with the pipelines, trucking LPG is one of the few options available to distribute it nationwide but a lack of the specialized trucks is contributing to shortages. This has been particularly felt in Baghdad, Kut and Baquba. As with kerosene, the situation in certain central and northern areas is made worse by the security situation discouraging drivers carrying imports from Turkey from proceeding south of Baiji to the main LPG depot at Taji, near Baghdad. This has, however, eased supply and prices further north, especially in transport hubs such as Mosul and closer to the Turkish border.

As an indication of the crisis in the capital, the price of a single LPG bottle in Baghdad has increased from ID3,500 to ID5,000, twenty times the official rate. Even at this price, it is often difficult to find supplies. Rationing has been introduced in cities such as Hilla where local authorities are working closely with the distribution companies to ensure fair distribution of scare supplies.

It is understood that the Coalition and Iraqi Ministry of Oil are looking for LPG trucks in the region, presumably with the intention of either leasing or purchasing them, so to increase the national LPG trucking fleet pending restoration of the pipelines.

The situation is generally aggravated by a tendency to hoard, further limiting supply. Given the experience of the population over the past generation, when fuel supply was unstable, relatively small disruptions to supply can shake confidence and cause panic-buying when stocks are available. It will require several weeks of sustained adequate supplies nationwide to restore stability to the market.



One of the most important parts of the LPG supply equation is the Southern Gas Plant at Khor Zubair, near Iraq’s main port of Umm Qasr. This is not yet functioning and has been expected to be operational numerous times since summer, producing up to 1200 tonnes per day. With estimated national estimated demand of 4200 tonnes per day, of which about two-thirds is supplied by imports, the importance of this plant cannot be overstated.

Southern Gas Plant receives natural gas from North Rumaila oil fields and separates the methane and ethane (C1 and C2) components of natural gas from the propane and butane (C3 and C4), being the main elements of the product distributed to the public. The plant has two trains, the first of which produces about 1300 tonnes per day, or about 30% of the national demand.

It is believed that the plant will be ready to produce LPG from this first train as soon as an associated processing plant in North Rumaila is functioning and able to pass the natural gas feedstock to Khor Zubair. Initial commissioning is now believed to be scheduled for late  November. It is unclear when it will be possible to bring the smaller second train online.

A vital requirement to keep the plant operational is the supply of stable power. It is thought to require a steady 15 MW each day. This is usually supplied from the national grid by underground cables, but this may be insufficiently reliable at present.  Independent power has been installed at the plant.

A further role for the LPG plant is to provide the power plant at Khor Zubair with the dry gas (C1 and C2) for power generation units to power both oil and non-oil facilities in the area.

In the north, reports indicate that North Gas Plant at Kirkuk has seen a precipitous fall in production this month. This may have been due to a combination of lower crude oil production from the northern fields, from which the plant draws its feedstock, pipeline sabotage, and major maintenance problems at the plant itself.

It is clear that even when both the northern and southern gas plants are functioning, and with the relatively small contribution of LPG production from the country’s three major refineries, Iraq will have to continue to import LPG for much of 2004. Only substantial investment and refurbishment of the gas plants will enable the country to be self-sufficient.

Basra refinery

Production in cubic metres for a typical day is shown below, indicating that an exceptionally high proportion of the refinery’s production is of heavy fuel oil, and of limited use to the general populace, but also suggesting that reserve stocks are being accumulated. The high level of heavy fuel oil is a function of the technical obsolescence of Iraq’s refining plant across the board with a low conversion capacity. Without substantial upgrading, the refineries will be unable to meet the country’s needs.

Apart from electrical and mechanical problems, and lack of much-needed major maintenance, the refinery may be suffering from the insufficient crude supplies, despite the high level of production in the south. Furthermore, as for the gas plants, stable and sufficient power supply is a concern. To address this, steps were taken by the Coalition to provide twenty relatively small 1 Megawatt generators; later, two medium-sized Alstom 13 MW generators were installed, largely by Iraqi engineers and technicians. The first is believed to have been successfully commissioned in mid-October. The second is expected to be operational this month.

Both of these generators (below) fall under the Food for Oil programme and have been installed in such a way that any surplus power may be supplied to the national grid. The smaller 1 MW generators may now be used as back-up power, or for other uses.

Sabotage: Cutting the Flow