Drone attack sparks fire in foreign oil companies' storage facility in Iraq's Basra amid oil crisis

A fire was reported at a storage facility belonging to foreign oil companies in Iraq’s Basra after a drone strike. Sources from the Basra Oil Company told Al Jazeera that one of its complexes located in Al-Burjusiya was hit by an Iranian drone.

The BOC, the national Iraqi company is responsible for the production and export of oil in the south of the country.

The company has about 25,000 employees.

Iraq’s Ministry of Oil  had entered a 20-year contract with BP (British Petroleum) and PetroChina in 2009 with the companies extending the contract in 2014.

The oil complex and storage facility in Basra is a key oil terminal that brings in the majority of the country’s oil revenue.

Most of Iraq’s oil is exported through the Strait of Hormuz, which has been shut by Iran.

Earlier, it was reported that Basra, the region where most of Iraq’s oil is produced, had come to a standstill after the war began. Oil production at Basra has fallen by more than 70 per cent. The volume of imported goods in the country meanwhile has been cut in half.

The attack, which was part of Iran’s ongoing attacks on foreign-owned energy infrastructure in the Middle East, has now raised concerns over the safety of key oil hubs in the region.

The Iraqi government would have to borrow money if oil production stays low even after mid-May, as funds are expected to run out by then.

"After that, the government would resort to issuing bonds," Ahmed Tabaqchali, an expert in Iraq's economy, told AP. "But not without consequences."

Output from Basra has dropped from 3.1 million barrels to roughly 900,000 across the province.

“Exports are currently completely halted. At the moment, we are considering alternative loading areas, but none are fully operational," chief engineer of BOC Ammar Hashim told The Associated Press.

Iran had also previously attacked the Burjisiya complex in Basra on March 6.