Iraq looks to develop domestic gas; replace Iranian imports

• DOI: http://doi.org/10.1111/oet.12805
• Published date: 01 July 2020
• Date: 01 July 2020

GAS AND POWER

Iraq looks to develop domestic gas; replace Iranian imports

Under pressure from the United States, Iraq's new gov-

ernment is revising plans to develop gas projects over the

next 2 to 3 years, as it seeks to lower dependence on gas

imports from Iran.

Iraq has long planned to boost gas and power

capacity, but its 3-year plan to become self-sufficient

stalled last October, when the Iraqi government was

reduced to caretaker capacity amid widespread pro-

tests.

1

The Covid-19 outbreak further complicated mat-

ters. But efforts are now underway to put things back

on track under a new government led by Mustafa Al-

Kadhimi, as pressure mounts from the United States to

tighten energy sanctions on Iran—which supplies Iraq

with gas and power.

The plan centers around boosting domestic gas sup-

ply, with the first phase focused on associated gas pro-

duction. Most of this is currently flared or vented, which

is detrimental to the environment, as well as a waste.

Iraq's oil ministry is looking at projects to develop all the

1.2 bn ft

3

/d of associated gas that Iraq currently produces,

out of a total gas production of 2.7 bn ft

3

/d, according to

Hamed Younis, deputy oil minister, speaking in early

June. These associated gas projects include 200 mn ft

3

/d

at the Nasiriyah field; 300 mn ft

3

/d at Halfaya and

400 mn ft

3

/d at Ratawi. Associated gas currently makes

up 70% of total gas reserves in the country, with the rest

being dry gas.

Iraq also has plans to develop these dry gas reserves,

which are concentrated in the 5.6 tcf Akkas (Iraq's largest

non-associated gas field) and Mansouriya fields. South

Korea's state-run Kogas signed a deal in 2011 to develop

Akkas, but the problematic security situation in the area

prevented any development for many years (the Islamic

State held the field from 2014 to 2017). Now the ministry

is pushing forward with plans to develop both of them,

with Akkas expected to produce 400 mn ft

3

/d, and

Mansouriya 300 mn ft

3

/d.

1|IRANIAN DEPENDENCE

Iraq relies on Iranian gas and electricity to meet 30% to

40% of power demand, and this is a key push-factor in

driving Iraq to become more self-reliant. Pressure from

the United States has been growing as it seeks to more

effectively implement sanctions, which it began imposing

on Iran's energy exports in 2018. So far, Iran's gas and

power sales to Iraq have been made exempt through

waivers. On 7 May, the United States extended the waiver

by another 120 days until 23 September, in an effort to

support Mustafa Al-Kadhimi's new government. The pre-

vious waiver, for 30 days, had been granted on 26 April—

the length of waivers had been getting shorter as the

United States attempted to ratchet up the pressure.

But in the week ended 6 June, Iraq renewed an agree-

ment to continue to import Iranian electricity for 2020

and 2021. This ignores the possibility of a tighter US

clampdown, and prioritizes ensuring sufficient supply

while a domestic shortfall remains. Majid Mahdi

Hantoush, who replaced Luay al-Khatteeb as minister of

electricity in the new government, emphasized the

importance of Iranian gas and power imports to Iraq as

he signed the deal.

2

Iraq imports around 1.2 GW/d of

electricity and takes around 1.5 bn ft

3

/d of Iranian gas

through pipelines to power stations in the south and east

of the country.

Iraq also has a number of agreements in place to

rebuild its power sector, including deals with Siemens,

General Electric and other European and Chinese com-

panies, as well as a power line from Jordan, and a power

interconnectivity project with the Gulf Co-operation

Council Interconnection Authority (GCCIA). A number

of these projects have stalled or been delayed by the

Covid-19 pandemic.

2|TURNING TO SAUDI

Saudi Arabia, which is also moving forward with devel-

oping its own domestic gas, appears willing to direct

some capital toward gas development in Iraq, and has

expressed interest in investing in a gas hub at Ratawi in

the south of the country, along with greater electricity

interconnectivity and possibly development of the Akkas

gas field, according to MEES.

US engineering firms Honeywell and Bechtel signed

an initial agreement in July last year to build the gas hub.

But Bechtel has since left. Honeywell is working with

DOI: 10.1111/oet.12805

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