Page 4 - MEOG Week 18 2021

MEOG COMMENTARY MEOG

Iraq turns attention to gas

A string of announcements relating to the Iraqi gas sector
this week indicates that the tide may finally be turning.

IRAQ IRAQ made a series of gas-related announce- first phase was never awarded.
ments this week, which, following on from the
recent award to China’s Sinopec of a develop- Iran payments
WHAT: ment contract award for the Al-Mansouriyah Despite the progress with domestic gas devel-
Iraq is one of the world’s gas and condensate, suggest that Baghdad is opments, in the days following Abdul Jabbar’s
worst gas flarers and finally getting serious about addressing flaring comments, Iraq reached a deal with Iran for
utilising associated and ramping up gas production. However, with settling outstanding debts to Tehran for gas.
gas and developing increased supplies from Iran and new flows The agreement was announced after a meeting
non-associated fields via Syria discussed, Baghdad obviously does between Iraqi Electricity Minister Majid Mahdi
offers an opportunity for not have a clear line of sight on when it might Hantoush and Iranian Energy Minister Reza
economic diversification. become self-reliant. Ardakanian in Tehran.
While this is all positive, it should be noted “In the meetings we had, all the ways and
WHY: that Iraq flared 632bn cubic feet (18bn cubic solutions for the resumption of Iran’s energy
Baghdad has struggled metres) of gas associated with oil production supply to Iraq were discussed, and certainly the
to keep the lights on in 2019, making it the world’s second-worst co-operation [between the two sides] will con-
and has become heavily offender. tinue,” said Hantoush who had also met with
reliant on gas and The Al-Mansouriyah award, which will see Iranian Oil Minister Bijan Namdar Zanganeh.
electricity imports from Sinopec partner state-owned Midland Oil Co. “We reached good agreements on this issue
Iran. to tap reserves of around 4.6 trillion cubic feet and payment methods,” he added.
(130 bcm), had been anticipated, with rumours The visit followed a reduction in flows by the
WHAT NEXT: swirling around Saudi Arabian involvement as National Iranian Gas Co. (NIGC) as a result of
Developing gas fields and a means of kick-starting Iraq’s gas sector and arrears building up from previous payments.
utilising flared gas has thereby reducing its reliance on imported gas Following his meeting with Hantoush, Zan-
major potential, but as and electricity from neighbouring Iran. ganeh said that two major gas export deals had
with most things in Iraq, Oil Minister Ihsan Abdul Jabbar this week been signed, while “27 bcm of gas has been
expectations should be said that developing Al-Mansouriyah will cost exported to Iraq … but the payment is facing
tempered. around $2.1bn, with gas produced from the field problems and we hope we could reach a solution
feeding the nearby Mansouriyah power station on the issue.” Baghdad is understood to be keen
and one in Baghdad. to have gas flows restored ahead of the hottest
Security problems hampered the efforts of the summer months, with Iranian media saying that
previous consortium led by Turkey’s TPAO well Hantoush spoke of issues unfreezing cash due
before the incursion by IS militants in 2014 and to Iran because of US sanctions on the Islamic
an engineering, procurement and construction Republic. However, Washington has given Bagh-
(EPC) contract tendered in 2015 on the planned dad a lengthy series of waivers, allowing Iraq to
100mn cubic foot (2.8mn cubic metre) per day pay Iran for gas and electricity supplies.

P4 www. NEWSBASE .com Week 18 05•May•2021