MEOG: Iraq moves to capture gas

This week’s MEOG looks at efforts by Iraq to capture and utilise associated gas, while its state oil marketer said it is yet to receive any oil volumes from the Kurdistan region.

Baker Hughes this week agreed a deal with the Ministry of Oil to capture up to 200mn cubic feet (5.7mn cubic metres) per day of gas from the Nassiriyah and Gharraf oilfields in Dhi Qar Governorate. The signing ceremony was attended by local and American officials, including Ambassador Matthew Tueller.

The company will construct modular gas processing facilities at the oilfields to capture gas associated with oil production.

The deal builds on a 2017 agreement between the US firm and the South Gas Co. which sought to produce around 100 mmcf (2.8 mcm) per day of gas by dehydrating and compressing associated gas from the two fields.

This plant would subsequently be expanded into a complete natural gas liquids (NGL) plant – recovering around 200 mmcf (5.6 mcm) per day of dry gas, LPG and condensate.

The dry gas will be used chiefly in domestic power generation, while the LPG and condensate will be deployed first to meet local demand for cooking fuel – with the remainder sent for export.

Speaking to MEOG, a representative of the MoO said that the agreement had been expected to be signed in 2020 but had been delayed on account of the coronavirus (COVID-19) pandemic.

Meanwhile, despite now being in the second half of September, Iraq’s Federal and Kurdish Regional Governments (KRG) still appear some way short of an agreement to end lengthy arguments about oil sales.

In late March, the Iraqi Cabinet passed an agreement pegging the 2021 budget at IQD130 trillion ($89.65bn) with a deficit estimated at IQD28.7 trillion ($19.79bn). With the country 97% reliant on oil exports, the budget is based on an oil price of $45 per barrel with total exports averaging 3.25mn barrels per day (bpd).

As in previous budgets, the KRG will receive 12.67% of the total, though this is contingent on it handing over the net revenues from 250,000 bpd of oil exports to Iraq’s state oil marketer SOMO and giving the revenues to the central treasury.

This week SOMO said that it is yet to receive any crude from the KRG, no doubt adding fuel to calls from Iraqi MPs for a tougher line on the KRG.