Gas wealth in Iraq is not currently exploited adequately and its contribution to budget revenues remains insignificant. However, gas is a hugely important resource to the country and, if well used, can operate
Iraq loses US$70 billion every year because the gas emitted in oil production is being burnt. The financial loss is only the beginning. Burning the gas also causes carbon dioxide emissions, which negatively affects the environment.
The Ministry of Oil has long been aware of the importance of Iraq’s gas and the huge revenues it could bring to the country.
“Within the future plans of the ministry, more careful consideration will be given to the utilisation of gas, especially with the success of the new rounds of licenses,” said Assem Jihad, the Ministry’s media spokesperson.
“This issue is of great importance. The Ministry plans to develop the gas industry and use the gas emitted during oil processing as well that found underground,” he continued, stating that the ministry will encourage international companies to invest in gas production in Iraq.
“We will open the door for investment in new oil fields such as the Saybeh oil field in Basra, and other fields in al-Mansouriyah, Diyala, and Ukaz in al-Anbar,” he promised.
The Ministry is currently in the process of creating the appropriate conditions to reach agreements with international companies for gas production. “Investment in gas requires the presence of an adequate infrastructure such as functioning electrical stations and specific equipment. We are currently making huge efforts to make use of locally-produced gas in fuelling our power stations.”
Iraq has already attempted to encourage companies to invest in the Ukaz gasfields in Anbar and the al-Mansouriyah field in Diyala during two licensing rounds held last year.
Reserves in the two fields are estimated at 45 percent of Iraq’s total gas wealth but it has still proven very difficult to attract investors. The security situation in the two provinces remains extremely poor. Anbar and Diyala are two of Iraq’s worst affected provinces. Infrastructure is also severely lacking, with little already in place for investors to work with.
According to Hamza al-Jawahiri, an oil expert in Iraq, “gas is equal in its importance to oil. If there is real investment in oil production in Iraq, the gas produced as a by-product would be enough to operate all of the country’s power plants and large savings will be made on the import of diesel currently used to operate the plants.”
He continued to confirm that the Ukaz gasfield in Anbar is a “huge project”. Soon, it is expected that it will supply Europe with gas.
Al-Jawahiri said that the Ukaz gas field in al-Anbar is a "huge project." It is soon expected to supply Europe with gas. He added that he expected Asian companies, working in Qatar also to play an important role in exporting Iraq’s gas surpluses.
“With stable security conditions, international companies will be encouraged to invest in Iraq and new fields will be discovered. Iraq will soon become one of the biggest gas producing and exporting countries.”
Over the course of last year, Iraqi and Turkish officials met to discuss the possibility of signing a Memorandum of Understanding over the pumping of Iraq’s gas to Europe, through the Turkish Nabucco pipeline, which carries gas from the Caspian Sea and the Middle East to Central Europe. Gas pumped through the pipe is expected to reduce European dependence on Russian gas by 2014.
According the oil industry expert, Jabbar al-Hilfi, Iraq owns provable natural gas reserves “equal to four trillian cubic metres.” The figure could, however, be much higher, with other estimates predicting more than double the volume and reserves a high as 9 trillion cubic metres. These figures come from studies carried out in the 1990s, although no recent studies have verified the claims. Apart from the abundance of gas, al-Hilfi also points to the high quality and low production costs of Iraqi gas as other appealing points for investors.
Al-Hilfi is also determined that Iraq’s wasted gas should be collected and processed into products such as diesel and clean, unleaded gasoline. It is through steps such as this that Iraq can rebuild its hydrocarbons sector and generate wealth for its economy through oil exports.