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Iraq finalizes 2 promising gas deals

Iraq finalizes 2 promising gas deals

June 5th, 2011 by SINAN SALAHEDDIN, Associated Press in News

BAGHDAD (AP) - Iraq on Sunday finalized two gas deals with a pair of international consortiums to develop two promising gas fields, the latest step by the war-ravaged country to tap into gas resources to fuel its growing electricity demands.

Iraqis have been struggling to rebuild their war-damaged electricity grid and improve power stations and lines, but blackouts are still common. Power shortages last summer spurred demonstrations that turned deadly when security forces fired into crowds.

Turkey's TPAO-led consortium will develop the 4.6 trillion cubic feet Mansouriya field in eastern Iraq for $7 per barrel of oil equivalent. It plans to reach a peak production of at least 320 million cubic feet per day.

State-run Kuwait Energy and Korea Gas Corp., KOGAS, are teaming up with TPAO.

The second consortium that groups Kuwait Energy with TPAO will develop the 1.1 trillion cubic feet Siba field in the south. They will be paid $7.50 per barrel of oil equivalent to what they produce, with a peak production level estimated at 100 million cubic feet.

"The ministry has drawn an ambitious plan to meet the needs for electricity, to meet the needs of gas-dependent industries and to make Iraq one of the leading countries that export gas," said Oil Minister Abdul-Karim Elaibi.

Insurgents have often attacked oil facilities to undermine the government. Mansouriya field is located in one of the country's most volatile provinces, Diyala, which is east of Baghdad along the Iranian border. Siba field is in southern Iraq, which has generally been more stable than the rest of the country.

However late Saturday an oil storage tank was attacked in the southern province of Basra, two Iraqi oil officials said Sunday. The attack occurred near the Zubair oil field. No casualties were reported and firefighters controlled the blaze. Authorities were investigating whether rockets or bombs caused the attack.

The officials spoke on condition of anonymity because they were was not authorized to release information.

Both gas field deals signed Sunday were snatched during Iraq's third energy bidding round last October that offered three gas fields. The third field was the 5.6 trillion-cubic foot Akkas field near the Syrian border in western Iraq. That deal was initialed with South Korea's KOGAS last Wednesday and still must be approved by the Cabinet before it is finalized.

Iraq produces about 7,000 megawatts of electricity daily - about half of its actual need. That includes about 1,000 megawatts imported from Iran and Turkey.

Last month, Iraq signed a tentative deal with Iran to import 25 million cubic meters of natural gas daily to feed two power plants in the northeastern suburbs of Baghdad for five years. It still needs the backing of Iraq's Cabinet and parliament.

Since the 2003 U.S.-led invasion, Iraq has struggled to develop its oil and gas industry. The sector, which had been ravaged by years of sanctions-induced neglect and damage, saw development efforts move fitfully as looting and sabotage added to the damage it sustained during the U.S.-led effort to oust President Saddam Hussein. Demand has also exploded as Iraqis can buy appliances never available under Saddam's government.

Iraq has awarded 15 oil and gas deals since 2008 to international energy companies in the first major investments in the country's energy industry in more than three decades.

The country, which sits atop the world's fourth-largest proven reserves of crude, also holds 126.7 trillion cubic feet of undeveloped gas reserves. For years, Iraq flared - or burned off - the gas largely because it lacked adequate facilities to process it.


Associated Press writer Nabil al-Jurani in Basra contributed to this report.