By Ahmed Rasheed
BAGHDAD, Jan 26 (Reuters) - Iraq will restore oil exports to 2.0 million barrels per day in 2009 and increase its refining capacity to become self sufficient in oil products by the end of the year, Oil Minister Hussain al-Sahristani said on Monday.
"We have pledged in the 2009 budget to raise daily crude production and export an average of 2 million barrels per day, which means a 150,000 bpd increase compared to 2008," Shahristani told a small group of reporters.
Iraq has had to cut back its spending plans for this year from $80 billion to $62 billion because of falling world oil prices. Although it has the world's third largest oil reserves, exports have been held back by poor infrastructure, falling last year from 2.0 million bpd in May to 1.8 million last month.
The country also has suffered from insufficient refining capacity, meaning it has in the past had to export crude oil to buy processed fuel.
"We are moving forward in our plans to increase the country's refining capacity to produce enough oil products and meet local need to reach self-sufficiency by the end of 2009," Shahristani said.
"The Oil Ministry was draining $5 billion from the budget in 2005 to import oil products. In the 2009 budget, we will not ask the Finance Ministry for even one dollar."
He was speaking at the Doura refinery in Baghdad, where he inaugurated a new 70,000 bpd refining unit built by Czech firm Prokop Engineering under a $40 million contract.
The new unit increases the Doura refinery's capacity to 160,000 barrels per day. Shahristani said another 70,000 bpd unit would be opened by the end of the year, raising capacity at the refinery to 230,000 bpd.
Iraq also intends to ask foreign companies during 2009 to bid for a $1 billion contract to build a Fluid Catalytic Cracker unit at its largest refinery Baiji, which would eventually allow it to produce enough refined products to become an exporter.
Nearly all of Iraq's government revenues comes from oil, and the fall in global prices by two-thirds over the past six months has threatened its plans to invest in desperately-needed reconstruction projects.
The government approved a new draft budget on Sunday that would cut spending in light of falling prices, the second time in three months it has had to slash its spending plans.
Meeting even those lower targets will depend on improving infrastructure and boosting exports. (Reporting by Ahmed Rasheed; writing by Peter Graff; editing by Michael Christie)