Iraqi oil and gas projects intersect with Iranian interests
LONDON - Analysts say US pressure on Iran accelerated efforts by the Iraqi government to end its dependence on Iranian gas supplies by developing Akkas gas field in Anbar province.
The move began with the withdrawal of the pro-Iranian forces of al-Hashed al-Shaabi from Akkas, Iraq’s largest gas field, and handing over its protection to the Iraqi Army and al-Hashed al-Ash’ari, which includes members of tribes living near the field.
US forces in Iraq also had a role in the move. In late January, the gas field was surveyed by a US force belonging to the international alliance to check on the deployment of the Iraqi Army and the tribal forces.
Confirmed natural gas reserves in the Akkas field, total 5.6 trillion cubic metres.
The Akkas field, in Qaim district near the Syrian border, was discovered in 1992, along the Euphrates River. Confirmed natural gas reserves in the field total 5.6 trillion cubic metres. Six wells had been drilled in the field before the Islamic State took control of it in 2014. Iraqi forces retook the field in late 2017.
In 2011, South Korea’s Kogas signed a contract with the Iraqi government to develop the field and was planning to produce 400 million standard cubic feet a day but production plans fell through because of the war in the region.
In another development that intersects Iranian interests, the Iraqi Oil Ministry announced that the Basra Oil Company entered into an agreement with the state-owned Iraqi Drilling Company to dig 40 oil wells in the Majnoon oil field near Basha. The field’s reserves overlap with Iranian fields.
The agreement will contribute to increasing Majnoon’s production from 240,000 barrels per day (bpd) to 450,000 bpd by 2021, the ministry said in a statement.
The new wells add to the 40 Majnoon wells that Iraq and US company Schlumberger agreed to develop in December. Thus, Iraq has engaged in a broad move to exploit oil and gas resources whose reserves overlap with Iranian fields.
The move is reflective of a trend in the past two years of relying on Iraqi cadres and companies to manage the country’s oil fields. Following the 2003 US-led invasion of Iraq, the management of Iraqi oil and gas wealth was handed over to foreign companies.
Last year, Royal Dutch Shell left Majnoon, putting operations in the hands of the state-run Basra Oil Company. In June 2017, the Iraqi government signed six contracts with the Emirati Hilal Company and Chinese firms for the development of five fields bordering Iran.
Analysts said Baghdad has only recently begun catching up with Iran’s extensive exploitation of joint fields after a long period of intentional neglect imposed by Iraqi parties loyal to Iran.
Data from the Iranian Oil Ministry indicate that production from the fields bordering Iraq amounts to about 300,000 bpd, with estimated annual revenue of about $5 billion.
Also, the Iraqi Oil Ministry signed an agreement with the China National Offshore Oil Corporation to conduct a seismic survey of areas adjacent to Iran and a maritime area in the Arabian Gulf.
A backlash came from Iraqi political parties close to Iran refusing to abide by US sanctions. In the opposite camp, Iraqi voices have denounced Tehran’s influence over Baghdad and demand compliance with US sanctions to safeguard the country’s interests.
Official data indicate that, in the last year, Iraq imported 154 million cubic feet of natural gas from Iran in addition to 1,300 megawatts of electricity.
Data released by BP showed that Iraq is buying Iranian gas at $11.23 per thousand cubic feet, compared to the $5.42 Germany pays for gas supplied from Russia and the $6.49 paid by Kuwait to buy liquefied natural gas from Iran.
Analysts point out that the Iraqi government is in a tight spot because it is aware that it cannot violate US sanctions, especially regarding dollar payments to Iran. The Iraqi parliament remains split into one bloc loyal to Tehran and one opposed to its influence in Iraq.
A report by the Washington Institute for Near East Policy stated that Iraq wastes about $2.5 billion a year burn up to 1.55 billion cubic feet per day of gas from oil extraction operations. This is equivalent to ten times the volume of gas imported from Iran.