24 February 2003
Having missed the boat on sales of natural gas by pipeline to Turkey, despite signing a memorandum of understanding in 1996, Iraqi officials are now drawing up plans to enter the broader international gas market.
These include proposals to join a regional gas pipeline network, as well as construction of a liquefied natural gas (LNG) terminal in southern Iraq.
Boosting Iraq’s natural gas reserves and export capabilities is one of the top priorities in a newly launched 10-year plan drawn up by the Oil Ministry.
“There is a trend around the world to expand the use of natural gas for economic and environmental, reasons which we think we should be part of. World demand for gas is growing and we think we can supply part of that,” the ministry’s director general of planning, Thamer al-Ghadban, told International Oil Daily in Baghdad. “Our objective is to turn Iraq into a gas exporting country.”
Lacking control over events — notably a potential US-led war that would throw Iraq into turmoil — ministry officials continue to work as if all were normal.
Moreover, such plans would likely serve as the basis for long-term development of Iraq’s oil and gas sector if and when 12-year-old United Nations sanctions are lifted.
Recent developments in the Mideast market — including the Arab Pipeline Project, a scheme to export gas by pipeline from Egypt to Jordan, Syria, Lebanon, and possibly Turkey and Europe — fit well into Iraq’s goal of carving out a place on the regional gas map.
According to al-Ghadban, Iraq has approached neighbors Jordan and Syria in recent months with the idea of linking into the gas pipeline network. The internal regulations of the Arab Pipeline Project allow for other countries to join — subject to approval by all four founding members.
Iraq already has an oil pipeline running to Syria, which is estimated to export roughly 200,000 barrels per day of illicit crude outside the UN oil-for-food program. Jordan and Iraq have been hatching plans for another oil pipe to replace current exports by truck.
“We have taken the first steps to join the [gas pipeline] project, which gives us an opportunity to contribute to the economies of Jordan and Lebanon and gives us another option to export gas to Turkey or through it to other markets,” al-Ghadban said.
Although Ankara has signed several gas import contracts with Iran and Russia in recent years, and faces problems matching supply with lower-than-expected demand, Baghdad still believes there is room to conclude a sales contract with Turkey based on the 1996 memorandum. That accord envisaged the sale of an initial 3 billion cubic meters per year (290 million cubic feet per day) over 20 years, ramping up to 10 Bcm/yr within five to six years. At the time, a French-Italian consortium expressed interest in the upstream phase to develop five non-associated gas fields dedicated to the project.
Ministry officials say they held talks as recently as January with Turkey’s minister of state for foreign trade, Torshad Tuzman, about the possibility of exporting gas by pipeline to Turkey and on to Europe. Turkey’s Ceyhan terminal on the Mediterranean coast is one of two main export outlets for Iraq’s crude.
In addition to these two gas export options, Iraq is drawing up a third scheme to join the already crowded Mideast LNG market. Studies are under way on the feasibility of building a terminal at Khor Zubeir or offshore Fao in southern Iraq, near the Kuwaiti border.
In the mid-1980s Iraq exported 200 MMcf/d of associated gas from Khor Zubeir to Kuwait through a 400 MMcf/d pipeline. Associated gas is currently processed at Khor Zubeir and at North Rumaila, while other supplies from the northern Kirkuk area supply power plants, refineries, and small industries.
Kuwait, for its part, is negotiating to import gas from Iran and Qatar.
Ministry officials say they are also planning to increase exploration activity to boost the country’s non-associated gas reserves.
Iraq’s natural gas reserves stand at 3,100 Bcm, according to official data — of which about 70% is associated. The main discovered gas fields are Chemchemal and Anfal in the northeast; Khashm al-Ahmar, Mansuriya, Tel Gazal, and Jaria Pika northeast of Baghdad; and Salahuddin (formerly Akkas) in the west, close to the Syrian border.
The 1992 discovery of Salahuddin — which also contains condensate — is currently being appraised. Iraqi ministry estimates put its reserves at 61 Bcm. Syrian Petroleum Co. (SPC) drilled a first appraisal well last year and is now working on a second.
By Ruba Husari, Baghdad
(Published in International Oil Daily Feb. 24, 2003)