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Economy News _ Baghdad
Saudi Arabia seeks to take advantage of its recent rapprochement with Iran to facilitate investment opportunities in Iraq's oil and gas sector. However, the problem is that ensuring that Iran does not object does not eliminate the existence of obstacles, including Iraq's readiness to receive major Saudi investments, and the second is the objection of the United States, which views this Saudi entry as a threat to the interests of its companies, according to a report by the London-based Al-Arab newspaper.
The report, which was followed by "Al-Iqtisad News", stated that Saudi Aramco possesses sufficient expertise, especially the ability to invest, which makes its projects in Iraq a candidate for implementation according to the exact dates, despite the competition.
Riyadh concluded a preliminary agreement with Baghdad in order to invest and participate in the development of the Crutch oil field in Anbar Governorate, and to direct associated gas towards building the Nebras petrochemical project.
Official estimates specify that Iraq's proven reserves of conventional natural gas have reached 3.5 trillion cubic meters, or about 1.5 percent of the global total, which puts Iraq in 12th rank among the holders of reserves in the world.
But about three-quarters of Iraq's total proven reserves consist of associated gas, a by-product that Iraq has been burning for free over the years, rather than using it to generate much-needed domestic power or selling it to generate much-needed revenue.
Iraq ignites, after Russia, the largest amount of gas in the world, by burning about 17 billion cubic meters in 2022, according to a study conducted by the World Bank.
Because of the waste of this resource of great importance, Iraq still depends on Iran to provide about 40 percent of its energy needs (through electricity and gas imports), which angered the Americans, who want Baghdad to reduce its relations with Tehran and abide by the sanctions imposed on Iran.
Iraq faces huge budget problems annually because of this waste, and long periods of power outages, especially during the summer.
Although Saudi investment in the field of oil and gas gives Iraqis hope for change, pro-Iranian Iraqi officials believe that the gas projects that Iraq seeks to implement through Saudi companies aim to harm Tehran's interests.
After Baghdad's participation in the "zero routine flaring" initiative of the United Nations and the World Bank, which aims to end gas flaring operations by 2030, Iraq announced the adoption of the same plan three times, without significant effect.
The latest update of the plan included harnessing a company to invest associated gas in the Gharf and Nasiriyah fields with a capacity of 200 million standard cubic feet per day, in addition to other oil fields north of Basra, with the aim of solving the chronic gas problem.
Aramco's development of the Crutch field will serve the same goal of boosting Iraq's domestic gas supplies. And the Saudi company has the ability to achieve this.
These factors will allow the overall development of the long-awaited Nebras Petrochemicals project. In January 2015, Royal Dutch Shell signed an agreement with Iraq worth $11 billion to build a petrochemical complex in Basra. The company owns 44 percent of the shares of the Basra Gas Company joint venture, which has a duration of 25 years.
The project aims to enable Iraq to increase its independence in the field of energy and achieve economic diversification by capturing flared gas from the Rumaila, West Qurna 1 and Zubair fields.
According to a source working closely with the Iraqi Ministry of Oil, who spoke exclusively to the US platform OilPrice, the suspension of this procedure was due to the demand of a number of senior oil officials to pay commissions of about 30 percent of the total cost of the Nebras petrochemical project.
The potential returns for Nibras remain huge, and Saudi Aramco has the capabilities to achieve them. With Nebras adopting a seed project (just as Saudi Arabia exploited a petrochemical complex project in the Jubail Industrial City), and a sustainable and reliable supply of ethane (usually found in associated gas streams) for at least 20-25 years, Iraq will have to spend about $40-50 billion. .
But then he will become one of the largest petrochemical producers in the Middle East, and his profits will be higher than his investments.
Aramco may not face the same difficulties in the Iraqi oil sector as Western companies. Commission payments are standard business practice in the Middle East and are not subject to the same kind of scrutiny as they are in the West. But the problem you may face in developing the planned Crutch and Nibras projects is the US view of the potential benefits and risks.
In addition, the shift in Saudi Arabia's longstanding geopolitical allegiance from the United States to China and Russia is a key feature of the new global oil market order. But America does not intend to make it easier for the kingdom, or for countries in the Middle East that are looking to do the same.
It is noteworthy that the United States has an additional reason for concern in the case of the Akkas gas field, as it has always considered it a major part of the plan to develop three fields (including the Mansouriya and Siba gas fields).
These three locations form a triangle across southern Iraq, extending from Mansouriya in the east (very close to the border with Iran) to Siba in the south (very close to the main Iraqi export hub of Basra), and then west through Akkas (close to the border with Syria).
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