The first private oil refinery in Tunisia is to be built this year.

Minister of Industry Mohamed Lamine Chakhari said on Thursday that “the work of building a new oil refinery project will start in late 2012. In addition, we expect the completion of the agreement on this project to begin on Sunday.”

This is only the second refinery in Tunisia after the Bizerte refinery, which is state-owned. According to the Ministry of Industry, this refinery is to be built in the region of Skhira, 60 km from Sfax, with an initial refining capacity of 120,000 barrels per day before it is to be increased to 250,000 barrels per day. The project not only includes the refinery, but processing units, storage, and office buildings as well.

This project forms part of the cooperation between Tunisia and Qatar. Qatar Petroleum Company won an international bid in March 2006 to develop the refinery.

The refining unit will be capable of generating about 1,200 jobs, according to the same source. The production of the refinery Skhira was originally intended for the domestic market. However, part of the production of this refinery unit will now become export-oriented in light of the high demand in foreign markets, as recommended by an update of the economic feasibility study for this project. The study estimated the overall cost of the refining unit may come to 3 billion dinars instead of 2 billion dinars that was initially planned.

Tunisia only has limited oil reserves in comparison to Algeria and Libya and produces an average of 3.5 million tonnes per year. It annually imports over one million tons of Libya.

This project has been driven by the increasing energy needs of the country. The Tunisian petroleum industry is expected to face stiff competition as it seeks to export its oil to the international market.