A History of Waste

Iraq is struggling between the urge to become a regional – and eventually an international – player on the gas scene and the need to supply a domestic market whose demand for gas for power generation is expected to continue rising drastically. That urge is exacerbated by the KRG’s ability to conclude swift deals to export gas regardless of whether such deals – which, like exporting oil, would require state to state agreements to export gas via Turkey – will materialise or not.

The Iraqi oil ministry has dropped the option to export oil it had offered to international oil companies bidding in its third bid round to develop three gas fields, after realising that that option is unrealistic in view of the limited volume of gas expected to be produced, and the impracticality of tasking the companies with constructing an export infrastructure and finding markets, which would also require state to state agreements.

It’s not a bad idea to allocate all the gas to be produced from the three fields of Akkas, Mansouriah and Siba to the domestic sector. The Iraqi ministry of electricity estimates that electricity demand will increase four-fold by 2020 to some 42,000 megawatt from the current 10,000-12,000 megawatt.

Looking at Iraqi oil ministry gas data for the past 20 years, the history of gas production, consumption and flaring over those two decades reveals a history full of waste all along.

Consider this: In 1989, when Iraq’s oil production averaged 2.9 million b/d for the year, Iraq produced 15, 432 MMcm/y or about 1.5 Bcf/d of gas, mostly – if not all – associated gas. About 42% of that volume was flared. That could be interpreted by the fact that it was only in the 1980’s that Mideast producers started focusing on gas development and usage and Iraq had yet to catch up after eight years of war (1980-1988) with Iran.

In 1999 gas production for the year amounted to 13,780 MMcm/y, yet what was flared was down to 31% of total output. By 2002, the last “normal” year before the 2003 war, Iraq was producing 13,017 MMcm/y and flaring was reduced to 24% of the total gas produced. At the time, oil production was close to that of 1989.

So where are we 20 years later? In 2009, total gas production amounted to 16,572 MMcm/y or 1.6 Bcf/d of which 42% or some 6,984 MMcm/y was flared. That’s the same percentage as 20 years earlier.

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