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Iraq faces the "worst economic crime" in the world with a new vision.. Will it escape from it?
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Economy News - Baghdad
[rtl]Iraq is poised to make major progress in its quest to get more associated gas produced alongside crude oil – a cornerstone of the government's efforts to improve electricity, shore up the national budget, improve public health, and meet new international climate pledges. .[/rtl]
[rtl]Due to decades of underinvestment, poor planning and mismanagement, Iraq lacks the infrastructure needed to capture and process about half of the associated gas it produces. Instead, this valuable commodity – about 18 billion cubic meters of gas annually – is burned in a wasteful process known as flaring, which is one of the main causes of global climate change.[/rtl]
[rtl]Iraq ranks second only to Russia as the world's worst offender when it comes to gas flaring, according to the World Bank's Global Gas Flaring Tracker report. Iraq is also at the forefront of countries experiencing the most severe impacts of climate change, including droughts that reduce arable land and force internal migration, as well as increasingly frequent dust storms that have disrupted daily life.[/rtl]
[rtl]The Iraqi government's stated goal is to eliminate flaring and methane emissions by 2030. It still has a long way to go: In 2023, the country was processing no more than 1.6 billion standard cubic feet per day of associated gas, according to Oil Minister Hayan Abdul Al-Ghani, while the World Bank estimated Iraq’s burning at more than 1.7 billion cubic feet per day.[/rtl]
[rtl]Iraq also appears to be on the cusp of making significant progress. In total, ongoing projects could add more than 700 million cubic feet per day of gas processing this year, which would increase the country's capacity by about 50 percent.[/rtl]
[rtl]In the near term, one of Iraq's biggest steps forward in capturing associated gas is expected to come from the Halfaya field in Maysan Governorate, which is operated by PetroChina. A new gas processing facility began operating this month, Hamza Abdul Baqi, general manager of the state-run South Gas Company, said in a recent interview with the Iraq Oil newspaper. Its production capacity is scheduled to eventually reach 300 million cubic feet per day, taking gas not only from Halfaya but also from the nearby Bazargan field.[/rtl]
[rtl]Another piece of near-term progress comes from the Basra Gas Company (BGC), a joint venture led by SGC and Royal Dutch Shell. The consortium recently increased its production capacity by 200 million standard cubic feet per day, to a total of 1.2 billion cubic feet per day, with the partial completion of the Basra NGL project, according to Abdel Baqi. The project's other production capacity of 200 million cubic feet per day is expected to be ready later this year.[/rtl]
[rtl]One of the most prominent new initiatives is the Gas Growth Integrated Project (GGIP), led by French company TotalEnergies. The portfolio of projects includes the construction of the Ratawi Gas Centre, which is scheduled to eventually process 600 million standard cubic feet per day of associated gas from several southern oil fields, including West Qurna 2 – the largest single source of gas. Burning gas in any oil field in the world, according to the World Bank.[/rtl]
[rtl]Among other new gas projects is an agreement with the Halfaya Gas Company, a subsidiary of the Iraqi Raban Al Safina Company, to build a gas processing station in the Nahr Bin Omar field in Basra. (Halfaya Gas Company is a private entity that appears to have no connection to the above-mentioned gas facility in the Halfaya field.) The contract, signed on January 7, calls for a plant capable of processing 150 million standard cubic feet per day, with an option to scale up. To 300 million cubic feet / day.[/rtl]
[rtl]There are enormous economic incentives for such projects. Iraq does not get enough gas to meet demand for electricity raw materials, and to help fill the gap, the country imports gas and electricity from Iran at a cost of about $7 billion annually. These supplies are not only expensive, but unreliable, with Tehran often reducing quantities to prioritize its domestic needs.[/rtl]
[rtl]As Iraq suffers from the effects of global climate change, the environmental impacts of gas flaring are also taking on an urgent nature that appears to be influencing government policy. At the COP28 climate summit held in Dubai, in December 2023, Iraq was among 150 countries that made a global pledge to end all methane emissions by 2030.[/rtl]
[rtl]Abdel Baqi said that a new gas processing facility in the Halfaya field with a capacity of 300 million cubic feet per day began operating this month.[/rtl]
[rtl]The project, built by China Petroleum Engineering and Construction Corporation (CPECC), was originally scheduled to be completed in two phases, with the second scheduled for mid-2024, but it appears the entire facility is now ready a little sooner than expected.[/rtl]
[rtl]In its initial operations, the facility can only operate at about half its capacity because the state-run Oil Pipeline Company still needs to complete a pipeline that will transport some natural gas liquids to Basra, according to Maysan Oil Company's media director, Haider Obaid. . Obaid said that a contract to help “accelerate the construction” of this project was offered to an Iranian company, which he did not specify.[/rtl]
[rtl]Abdul Baqi identified the Iranian company as a setup. He added that the work was delayed "due to difficulties that were not technical, but rather due to the sanctions imposed on Iranian companies." Abdel Baqi said that these issues have not been resolved, but there are “discussions to reach solutions,” with the possibility of a temporary “emergency solution” to transfer liquefied gas production using tanks as an alternative until the pipeline extension project is completed.[/rtl]
[rtl]Obaid said that the gas processing facility is expected to begin operating with a capacity of 150 million cubic feet per day, “to feed a [local] investment power station. The project will also provide additional quantities of gas to the Maysan gas power station in the first phase.”[/rtl]
[rtl]Power plants in Maysan Governorate are currently operating below capacity largely due to a shortage of raw materials. According to Maysan Electricity Media Director Haider Al-Saad, a gas-powered power station in Al-Kahla district has a nominal capacity of 750 megawatts, but it currently produces only 100 megawatts due to insufficient supplies of high-quality gas.[/rtl]
[rtl]Another power plant, in Amara, is scheduled to double its capacity from 250 to 500 megawatts this summer, which will also increase domestic demand for gaseous raw materials.[/rtl]
[rtl]The Halfaya gas processing plant is expected to receive gas not only from Halfaya but also from the Bazargan field, which is part of the so-called East Maysan group of fields operated by the China National Offshore Oil Corporation (CNOOC). According to Obaid, a local company called Maysan Energy Company Limited recently completed laying a 70-kilometre pipeline linking the gas compression station in Bazargan to the new Halfaya gas facility.[/rtl]
[rtl]On April 3, officials from CNOOC and MOC held a planning meeting to discuss the status of the pressure system to be installed in Bazargan, according to Obaid. This is said to be the last major piece of infrastructure needed before the pipeline begins transporting gas to the Halfaya processing unit.[/rtl]
[rtl]Halfaya currently produces about 350,000 barrels of crude per day, according to the Ministry of Oil and field officials. Obaid said that when it reaches the target level of 400,000 barrels per day, associated gas production will also rise and the processing plant will be supplied “only with gas from the Halfaya field,” and gas flaring in the field will be completely eliminated.[/rtl]
[rtl]At that point, other fields in Maysan Governorate are still expected to burn between 60 to 80 million cubic feet per day.[/rtl]
[rtl]An Oil Ministry official said: “Maysan Oil Company continues to establish surface projects to reduce the burning of associated gas.” “It is hoped that there will be no burning in the company’s fields by 2026.”[/rtl]
[rtl]Progress – and uncertainty – at BGC[/rtl]
[rtl]The Basra Gas Project, a joint venture between Shell (44%), Mitsubishi Company (5%) and South Gas Company (51%), is the largest single project to capture associated gas in Iraq. Following recent progress, it now has the capacity to process 1.2 billion standard cubic feet per day from three major oil fields - Zubair, West Qurna 1 and Rumaila.[/rtl]
[rtl]More than a decade after the opening of the Basra Gas Company, the three fields are still burning large quantities of gas. The original plan in 2013 targeted processing capacity of 2 billion standard cubic feet per day by 2017 from 250 million standard cubic feet per day, but that timeline has been delayed by a range of factors, including disputes over payments and financing. Lack of coordination between BGC and field operators, security problems, and bureaucratic complexities.[/rtl]
[rtl]The company expects soon to increase its production capacity to 1.4 billion cubic feet per day with the completion of the liquefied natural gas project. In theory, this could capture about 93% of the total gas from the three fields. But in reality, even before BGC began operating, there was not enough gas supply from the three fields to utilize BGC's capacity.[/rtl]
[rtl]According to Abdel Baqi, the consortium receives up to 190 million cubic feet per day from West Qurna 1, 170 million cubic feet per day from Zubair, 370 million cubic feet per day from North Rumaila, and 180 million cubic feet per day from South Rumaila. A total of about 910 million cubic feet per day.[/rtl]
[rtl]Abdel-Baqi said supply is lower than expected, partly because those fields produce smaller amounts of oil and associated gas than their original contracts. Another factor is that some of the raw gas is diverted to power plants needed to operate the oil fields, particularly in the Zubair field operated by Eni, according to Basra Gas Company Deputy Director Marfa Kadhim Al-Asadi, speaking to the Iraq Oil newspaper in November 2023. . interview .[/rtl]
[rtl]A more fundamental problem stems from the design of the contracts under which the three giant oil fields are being developed. The Rumaila, West Qurna 1 and Zubair operators must send excess gas to Basra Gas Company, but they have no commercial incentive to do so. This lack of consensus has been exacerbated by a lack of clarity about how to draw the line between the field operator's gas-related responsibilities and those of the Basrah Gas Company, especially when it comes to sending low-pressure gas from the field to the Basrah Gas Company facilities.[/rtl]
[rtl]Resolving these questions has been particularly difficult in the context of a changing and challenging regulatory environment, in which upstream and midstream operators respond to different state-run companies reporting to the Ministry of Oil.[/rtl]
[rtl]Industry officials in particular describe the strong working relationship between Basra Gas Company and BP, the operator of Rumaila, as well as ExxonMobil, the outgoing operator of the West Qurna 1 field. But the relationship with Eni appears more difficult.[/rtl]
[rtl]Eni has long used associated raw gas from Zubair to fuel a nearby 700 MW power station. According to Abdul Baqi, some of this infrastructure was built on the assumption that Zubair would eventually reach the plateau target of 1.2 million barrels per day with a very high need for electricity, while the field is currently producing less than 500,000 barrels per day.[/rtl]
[rtl]Abdel Baqi said: “There are surplus generating units, and the country needs to produce electricity, especially in the summer.” Therefore, raw gas from Zubair is burned in the power plant to generate local power instead of being sent to the Basra Gas Company.[/rtl]
[rtl]This is not only a problem for BGC – it is also a waste of resources. Because the gas is not processed first, Iraq loses the opportunity to extract valuable liquids and condensates, according to several officials familiar with the situation.[/rtl]
[rtl]Abdul Baqi said: “We proposed several solutions, including using dry gas instead of raw gas [to generate Zubair power].” “We faced technical obstacles, given that the generation stations are designed for raw gas and not dry gas, and therefore Eni did not support moving in this direction.... The generation of turbine units cannot be stopped and the country needs this electrical energy, and we did not reach any solution in this regard, but we hope To arrive at solutions.”[/rtl]
[rtl]Al-Asadi said that the quantities of gas from Al-Zubair to the Basra Gas Company are seasonal depending on the local demand for electricity, which decreases when there is no need for air conditioners. In months of low demand, and with relatively high gas volumes from Zubair, Basra Gas Company processed up to 1 billion standard cubic feet per day.[/rtl]
[rtl]Abdul Baqi confirmed that there are currently no plans to expand the capacity of the Basra Gas Company further. After reaching a capacity of 1 billion cubic feet per day, the consortium has made plans to develop another capacity of 1 billion cubic feet per day through five production lines each with a capacity of 200 million cubic feet per day, two of which are now in operation. Abdel Baqi said that BNGL1 is now operational, and BNGL2 will be ready “at the end of this year.”[/rtl]
[rtl]Abdel Baqi added: “As for the third, fourth and fifth phase, this depends on an extensive study of preparedness in the event that there are additional quantities produced from the three fields or if there are other fields that feed the gas.” He added, "This depends on the Ministry of Oil. There is flexibility in the agreement, so we can resort to other fields if there is a need for gas."[/rtl]
[rtl]Another senior gas official, who spoke on condition of anonymity, was more frank, expecting Basra Gas Company to abandon further expansion plans.[/rtl]
[rtl]Artawi Gas Center[/rtl]
[rtl]In its first phase, the Artawi Gas Center will collect and process 300 million cubic feet per day of associated gas produced not only at Artawi but also Majnoon, operated by Basra Oil Company, and West Qurna 2, operated by Lukoil.[/rtl]
[rtl]The West Qurna 2 field is a stark example of Iraq's gas flaring problem: according to the World Bank, it is the largest gas flaring source in the world.[/rtl]
[rtl]According to Abdel Baqi, the first phase of the Artawi Gas Center project will be ready “in about four years.” Meanwhile, the GGIP consortium is also pursuing “fast track” initiatives to begin reducing gas flaring within 12 to 18 months.[/rtl]
[rtl]The GGIP also includes a second phase of the Artawi hub, with a capacity of another 300 million cubic feet per day, to receive gas from other state-run fields including Tuba and Luhais. Neither Total Energy nor Iraqi oil officials set a timetable for completing this phase.[/rtl]
[rtl]Abdel-Baqi said that under a contract with KBR, the engineering work for the project at the gas center is 90 percent complete, with enough of the project in place to begin issuing some tenders, including power generation units and gas compressors.[/rtl]
[rtl]“It is expected that by mid-2024, all engineering designs will be completed and equipment procurement will begin,” Abdel-Baqi said.[/rtl]
[rtl]The cornerstone of the GGIP programme, led by TotalEnergies, is the development and production contract for the Artawi oil field in Basra, to raise production capacity from approximately 80,000 barrels per day to 210,000 barrels per day. The revenue streams from Artawi are then supposed to support financing the development of the field and three other projects: a gas center, a large water injection project, and a solar power plant.[/rtl]
[rtl]In a recent company posting, TotalEnergies confirmed that it began operating Ratawi in November 2023. Its first mission is to “restore the integrity and operability of existing facilities to secure current production (about 60 kb/d) and then increase it to 120 kb/d.” Dr."[/rtl]
[rtl]Thanks to the production capacity of the Ratawi Gas Centre, the field will be able to increase its capacity to the planned target of 210,000 barrels per day, with an expected associated gas production of 160 million cubic feet per day, according to Total Energy.[/rtl]
[rtl]Nahr bin Omar[/rtl]
[rtl]Iraq's largest gas capture projects have benefited from the financial heft of large multinational companies, but a new project at the state-run Nahr Bin Omar field in Basra could represent an alternative model for gas development.[/rtl]
[rtl]In a ceremony held on January 7, the Ministry of Oil awarded the Build, Own, Operate and Transfer (BOOT) contract to Halfaya Gas Company, a subsidiary of the Iraqi Raban Al Safina Company, to rehabilitate and expand the gas processing infrastructure at Nahr Bin Omar.[/rtl]
[rtl]It appears that the Halfaya Gas Company has no connection to the associated gas capture project in the Halfaya field. However, according to an Oil Ministry official, Raban is indirectly linked to the Halfaya project, as the parent company of Maysan Energy Company Limited, which built the pipeline that is supposed to transport associated gas from Bazargan to Halfaya.[/rtl]
[rtl]Iraq currently captures about 100 million standard cubic feet per day from the Bin Omar River and sends it to a nearby power station, while another 50 million cubic feet per day is burned, according to a South Gas Company official.[/rtl]
[rtl]The upcoming project will increase the field's gas processing capacity to 150 million cubic feet per day and allow for better fluid capture. According to the materials published by the ship’s captain, there is an option for a second station with a capacity of 150 million cubic feet per day.[/rtl]
[rtl]The project took a major step forward on April 2, when the Iraqi Council of Ministers approved a $3.246 billion sovereign guarantee, according to official meeting decisions seen by Naft Iraq newspaper. The guarantee is “for a period not exceeding 11 years, for the Bin Omar field gas project, after the Ministry of Oil and the South Gas Company amended the contract by preparing an annex to determine the scope of the government guarantee.”[/rtl]
[rtl]Previous efforts to expand gas processing at Nahr Bin Omar have failed, including a deal that was nominally awarded in 2018 to US company Orion Energy but never signed, when current Oil Minister Hayyan Abdul Ghani was SGC's director general.[/rtl]
[rtl]The ship's captain seems to be getting more attention. According to several officials at the Ministry of Oil and Industry, the company's leaders are known to have influence and high-level connections, which is one of the factors that helped the company move relatively quickly through difficult bureaucracy.[/rtl]
[rtl]According to its website, Raban Al-Safina is the Iraqi partner of the German technology company Siemens, and has a factory in Najaf that produces infrastructure for the transmission and distribution of electricity. As for the Ben Omar River project, an industry official said that Raban intends to contract with Honeywell/UOP for the equipment and KBR to manage the project.[/rtl]
[rtl]The Iraqi company also signed a joint venture agreement with British company EthosEnergy in February 2024 to build “a new purpose-built facility near Baghdad,” according to an EthosEnergy press release, including “a service center containing calibration laboratories and gas turbine components.”[/rtl]
[rtl]Iraq is also building a new gas facility at the state-run Nasiriyah field, to process associated gas from that project and the Gharraf field, which is operated by Malaysia's Petronas.[/rtl]
[rtl]The government first signed a contract with engineering firm Baker Hughes in 2018, but the project faced delays, some related to disruptions caused by the pandemic. According to Abdel Baqi, this work is now 60 percent complete. Compressors have also been ordered from suppliers in Italy, via the PEG consortium.[/rtl]
[rtl]Abdel Baqi said that the first phase of the project will raise the gas processing capacity to 67 million cubic feet per day. Ultimately, the facility will have a capacity of 200 million standard cubic feet per day, which Abdel Baqi said is enough to handle the expected associated gas production for both Nasiriyah and Gharraf once they reach their target targets.[/rtl]
[rtl]Iraqi gas officials estimated last year that the first phase of the Nasiriyah gas station would go into operation in 2024, but in his recent interview with the Iraq Oil newspaper, Abdul Baqi did not provide a specific timetable.[/rtl]
[rtl]The project received a financial boost in September 2023, when the Iraqi Council of Ministers voted in favor of a request from the state-run Dhi Qar Oil Company, which manages Nasiriyah and oversees Al-Gharraf, to approve an increase in oil production. The total expected cost of the project. According to a Cabinet statement, the new price of $272 million is 7.3 percent higher than expected.[/rtl]
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Added 04/17/2024 - 2:59 PM
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Economy News - Baghdad
[rtl]Iraq is poised to make major progress in its quest to get more associated gas produced alongside crude oil – a cornerstone of the government's efforts to improve electricity, shore up the national budget, improve public health, and meet new international climate pledges. .[/rtl]
[rtl]Due to decades of underinvestment, poor planning and mismanagement, Iraq lacks the infrastructure needed to capture and process about half of the associated gas it produces. Instead, this valuable commodity – about 18 billion cubic meters of gas annually – is burned in a wasteful process known as flaring, which is one of the main causes of global climate change.[/rtl]
[rtl]Iraq ranks second only to Russia as the world's worst offender when it comes to gas flaring, according to the World Bank's Global Gas Flaring Tracker report. Iraq is also at the forefront of countries experiencing the most severe impacts of climate change, including droughts that reduce arable land and force internal migration, as well as increasingly frequent dust storms that have disrupted daily life.[/rtl]
[rtl]The Iraqi government's stated goal is to eliminate flaring and methane emissions by 2030. It still has a long way to go: In 2023, the country was processing no more than 1.6 billion standard cubic feet per day of associated gas, according to Oil Minister Hayan Abdul Al-Ghani, while the World Bank estimated Iraq’s burning at more than 1.7 billion cubic feet per day.[/rtl]
[rtl]Iraq also appears to be on the cusp of making significant progress. In total, ongoing projects could add more than 700 million cubic feet per day of gas processing this year, which would increase the country's capacity by about 50 percent.[/rtl]
[rtl]In the near term, one of Iraq's biggest steps forward in capturing associated gas is expected to come from the Halfaya field in Maysan Governorate, which is operated by PetroChina. A new gas processing facility began operating this month, Hamza Abdul Baqi, general manager of the state-run South Gas Company, said in a recent interview with the Iraq Oil newspaper. Its production capacity is scheduled to eventually reach 300 million cubic feet per day, taking gas not only from Halfaya but also from the nearby Bazargan field.[/rtl]
[rtl]Another piece of near-term progress comes from the Basra Gas Company (BGC), a joint venture led by SGC and Royal Dutch Shell. The consortium recently increased its production capacity by 200 million standard cubic feet per day, to a total of 1.2 billion cubic feet per day, with the partial completion of the Basra NGL project, according to Abdel Baqi. The project's other production capacity of 200 million cubic feet per day is expected to be ready later this year.[/rtl]
[rtl]One of the most prominent new initiatives is the Gas Growth Integrated Project (GGIP), led by French company TotalEnergies. The portfolio of projects includes the construction of the Ratawi Gas Centre, which is scheduled to eventually process 600 million standard cubic feet per day of associated gas from several southern oil fields, including West Qurna 2 – the largest single source of gas. Burning gas in any oil field in the world, according to the World Bank.[/rtl]
[rtl]Among other new gas projects is an agreement with the Halfaya Gas Company, a subsidiary of the Iraqi Raban Al Safina Company, to build a gas processing station in the Nahr Bin Omar field in Basra. (Halfaya Gas Company is a private entity that appears to have no connection to the above-mentioned gas facility in the Halfaya field.) The contract, signed on January 7, calls for a plant capable of processing 150 million standard cubic feet per day, with an option to scale up. To 300 million cubic feet / day.[/rtl]
[rtl]There are enormous economic incentives for such projects. Iraq does not get enough gas to meet demand for electricity raw materials, and to help fill the gap, the country imports gas and electricity from Iran at a cost of about $7 billion annually. These supplies are not only expensive, but unreliable, with Tehran often reducing quantities to prioritize its domestic needs.[/rtl]
[rtl]As Iraq suffers from the effects of global climate change, the environmental impacts of gas flaring are also taking on an urgent nature that appears to be influencing government policy. At the COP28 climate summit held in Dubai, in December 2023, Iraq was among 150 countries that made a global pledge to end all methane emissions by 2030.[/rtl]
[rtl]Abdel Baqi said that a new gas processing facility in the Halfaya field with a capacity of 300 million cubic feet per day began operating this month.[/rtl]
[rtl]The project, built by China Petroleum Engineering and Construction Corporation (CPECC), was originally scheduled to be completed in two phases, with the second scheduled for mid-2024, but it appears the entire facility is now ready a little sooner than expected.[/rtl]
[rtl]In its initial operations, the facility can only operate at about half its capacity because the state-run Oil Pipeline Company still needs to complete a pipeline that will transport some natural gas liquids to Basra, according to Maysan Oil Company's media director, Haider Obaid. . Obaid said that a contract to help “accelerate the construction” of this project was offered to an Iranian company, which he did not specify.[/rtl]
[rtl]Abdul Baqi identified the Iranian company as a setup. He added that the work was delayed "due to difficulties that were not technical, but rather due to the sanctions imposed on Iranian companies." Abdel Baqi said that these issues have not been resolved, but there are “discussions to reach solutions,” with the possibility of a temporary “emergency solution” to transfer liquefied gas production using tanks as an alternative until the pipeline extension project is completed.[/rtl]
[rtl]Obaid said that the gas processing facility is expected to begin operating with a capacity of 150 million cubic feet per day, “to feed a [local] investment power station. The project will also provide additional quantities of gas to the Maysan gas power station in the first phase.”[/rtl]
[rtl]Power plants in Maysan Governorate are currently operating below capacity largely due to a shortage of raw materials. According to Maysan Electricity Media Director Haider Al-Saad, a gas-powered power station in Al-Kahla district has a nominal capacity of 750 megawatts, but it currently produces only 100 megawatts due to insufficient supplies of high-quality gas.[/rtl]
[rtl]Another power plant, in Amara, is scheduled to double its capacity from 250 to 500 megawatts this summer, which will also increase domestic demand for gaseous raw materials.[/rtl]
[rtl]The Halfaya gas processing plant is expected to receive gas not only from Halfaya but also from the Bazargan field, which is part of the so-called East Maysan group of fields operated by the China National Offshore Oil Corporation (CNOOC). According to Obaid, a local company called Maysan Energy Company Limited recently completed laying a 70-kilometre pipeline linking the gas compression station in Bazargan to the new Halfaya gas facility.[/rtl]
[rtl]On April 3, officials from CNOOC and MOC held a planning meeting to discuss the status of the pressure system to be installed in Bazargan, according to Obaid. This is said to be the last major piece of infrastructure needed before the pipeline begins transporting gas to the Halfaya processing unit.[/rtl]
[rtl]Halfaya currently produces about 350,000 barrels of crude per day, according to the Ministry of Oil and field officials. Obaid said that when it reaches the target level of 400,000 barrels per day, associated gas production will also rise and the processing plant will be supplied “only with gas from the Halfaya field,” and gas flaring in the field will be completely eliminated.[/rtl]
[rtl]At that point, other fields in Maysan Governorate are still expected to burn between 60 to 80 million cubic feet per day.[/rtl]
[rtl]An Oil Ministry official said: “Maysan Oil Company continues to establish surface projects to reduce the burning of associated gas.” “It is hoped that there will be no burning in the company’s fields by 2026.”[/rtl]
[rtl]Progress – and uncertainty – at BGC[/rtl]
[rtl]The Basra Gas Project, a joint venture between Shell (44%), Mitsubishi Company (5%) and South Gas Company (51%), is the largest single project to capture associated gas in Iraq. Following recent progress, it now has the capacity to process 1.2 billion standard cubic feet per day from three major oil fields - Zubair, West Qurna 1 and Rumaila.[/rtl]
[rtl]More than a decade after the opening of the Basra Gas Company, the three fields are still burning large quantities of gas. The original plan in 2013 targeted processing capacity of 2 billion standard cubic feet per day by 2017 from 250 million standard cubic feet per day, but that timeline has been delayed by a range of factors, including disputes over payments and financing. Lack of coordination between BGC and field operators, security problems, and bureaucratic complexities.[/rtl]
[rtl]The company expects soon to increase its production capacity to 1.4 billion cubic feet per day with the completion of the liquefied natural gas project. In theory, this could capture about 93% of the total gas from the three fields. But in reality, even before BGC began operating, there was not enough gas supply from the three fields to utilize BGC's capacity.[/rtl]
[rtl]According to Abdel Baqi, the consortium receives up to 190 million cubic feet per day from West Qurna 1, 170 million cubic feet per day from Zubair, 370 million cubic feet per day from North Rumaila, and 180 million cubic feet per day from South Rumaila. A total of about 910 million cubic feet per day.[/rtl]
[rtl]Abdel-Baqi said supply is lower than expected, partly because those fields produce smaller amounts of oil and associated gas than their original contracts. Another factor is that some of the raw gas is diverted to power plants needed to operate the oil fields, particularly in the Zubair field operated by Eni, according to Basra Gas Company Deputy Director Marfa Kadhim Al-Asadi, speaking to the Iraq Oil newspaper in November 2023. . interview .[/rtl]
[rtl]A more fundamental problem stems from the design of the contracts under which the three giant oil fields are being developed. The Rumaila, West Qurna 1 and Zubair operators must send excess gas to Basra Gas Company, but they have no commercial incentive to do so. This lack of consensus has been exacerbated by a lack of clarity about how to draw the line between the field operator's gas-related responsibilities and those of the Basrah Gas Company, especially when it comes to sending low-pressure gas from the field to the Basrah Gas Company facilities.[/rtl]
[rtl]Resolving these questions has been particularly difficult in the context of a changing and challenging regulatory environment, in which upstream and midstream operators respond to different state-run companies reporting to the Ministry of Oil.[/rtl]
[rtl]Industry officials in particular describe the strong working relationship between Basra Gas Company and BP, the operator of Rumaila, as well as ExxonMobil, the outgoing operator of the West Qurna 1 field. But the relationship with Eni appears more difficult.[/rtl]
[rtl]Eni has long used associated raw gas from Zubair to fuel a nearby 700 MW power station. According to Abdul Baqi, some of this infrastructure was built on the assumption that Zubair would eventually reach the plateau target of 1.2 million barrels per day with a very high need for electricity, while the field is currently producing less than 500,000 barrels per day.[/rtl]
[rtl]Abdel Baqi said: “There are surplus generating units, and the country needs to produce electricity, especially in the summer.” Therefore, raw gas from Zubair is burned in the power plant to generate local power instead of being sent to the Basra Gas Company.[/rtl]
[rtl]This is not only a problem for BGC – it is also a waste of resources. Because the gas is not processed first, Iraq loses the opportunity to extract valuable liquids and condensates, according to several officials familiar with the situation.[/rtl]
[rtl]Abdul Baqi said: “We proposed several solutions, including using dry gas instead of raw gas [to generate Zubair power].” “We faced technical obstacles, given that the generation stations are designed for raw gas and not dry gas, and therefore Eni did not support moving in this direction.... The generation of turbine units cannot be stopped and the country needs this electrical energy, and we did not reach any solution in this regard, but we hope To arrive at solutions.”[/rtl]
[rtl]Al-Asadi said that the quantities of gas from Al-Zubair to the Basra Gas Company are seasonal depending on the local demand for electricity, which decreases when there is no need for air conditioners. In months of low demand, and with relatively high gas volumes from Zubair, Basra Gas Company processed up to 1 billion standard cubic feet per day.[/rtl]
[rtl]Abdul Baqi confirmed that there are currently no plans to expand the capacity of the Basra Gas Company further. After reaching a capacity of 1 billion cubic feet per day, the consortium has made plans to develop another capacity of 1 billion cubic feet per day through five production lines each with a capacity of 200 million cubic feet per day, two of which are now in operation. Abdel Baqi said that BNGL1 is now operational, and BNGL2 will be ready “at the end of this year.”[/rtl]
[rtl]Abdel Baqi added: “As for the third, fourth and fifth phase, this depends on an extensive study of preparedness in the event that there are additional quantities produced from the three fields or if there are other fields that feed the gas.” He added, "This depends on the Ministry of Oil. There is flexibility in the agreement, so we can resort to other fields if there is a need for gas."[/rtl]
[rtl]Another senior gas official, who spoke on condition of anonymity, was more frank, expecting Basra Gas Company to abandon further expansion plans.[/rtl]
[rtl]Artawi Gas Center[/rtl]
[rtl]In its first phase, the Artawi Gas Center will collect and process 300 million cubic feet per day of associated gas produced not only at Artawi but also Majnoon, operated by Basra Oil Company, and West Qurna 2, operated by Lukoil.[/rtl]
[rtl]The West Qurna 2 field is a stark example of Iraq's gas flaring problem: according to the World Bank, it is the largest gas flaring source in the world.[/rtl]
[rtl]According to Abdel Baqi, the first phase of the Artawi Gas Center project will be ready “in about four years.” Meanwhile, the GGIP consortium is also pursuing “fast track” initiatives to begin reducing gas flaring within 12 to 18 months.[/rtl]
[rtl]The GGIP also includes a second phase of the Artawi hub, with a capacity of another 300 million cubic feet per day, to receive gas from other state-run fields including Tuba and Luhais. Neither Total Energy nor Iraqi oil officials set a timetable for completing this phase.[/rtl]
[rtl]Abdel-Baqi said that under a contract with KBR, the engineering work for the project at the gas center is 90 percent complete, with enough of the project in place to begin issuing some tenders, including power generation units and gas compressors.[/rtl]
[rtl]“It is expected that by mid-2024, all engineering designs will be completed and equipment procurement will begin,” Abdel-Baqi said.[/rtl]
[rtl]The cornerstone of the GGIP programme, led by TotalEnergies, is the development and production contract for the Artawi oil field in Basra, to raise production capacity from approximately 80,000 barrels per day to 210,000 barrels per day. The revenue streams from Artawi are then supposed to support financing the development of the field and three other projects: a gas center, a large water injection project, and a solar power plant.[/rtl]
[rtl]In a recent company posting, TotalEnergies confirmed that it began operating Ratawi in November 2023. Its first mission is to “restore the integrity and operability of existing facilities to secure current production (about 60 kb/d) and then increase it to 120 kb/d.” Dr."[/rtl]
[rtl]Thanks to the production capacity of the Ratawi Gas Centre, the field will be able to increase its capacity to the planned target of 210,000 barrels per day, with an expected associated gas production of 160 million cubic feet per day, according to Total Energy.[/rtl]
[rtl]Nahr bin Omar[/rtl]
[rtl]Iraq's largest gas capture projects have benefited from the financial heft of large multinational companies, but a new project at the state-run Nahr Bin Omar field in Basra could represent an alternative model for gas development.[/rtl]
[rtl]In a ceremony held on January 7, the Ministry of Oil awarded the Build, Own, Operate and Transfer (BOOT) contract to Halfaya Gas Company, a subsidiary of the Iraqi Raban Al Safina Company, to rehabilitate and expand the gas processing infrastructure at Nahr Bin Omar.[/rtl]
[rtl]It appears that the Halfaya Gas Company has no connection to the associated gas capture project in the Halfaya field. However, according to an Oil Ministry official, Raban is indirectly linked to the Halfaya project, as the parent company of Maysan Energy Company Limited, which built the pipeline that is supposed to transport associated gas from Bazargan to Halfaya.[/rtl]
[rtl]Iraq currently captures about 100 million standard cubic feet per day from the Bin Omar River and sends it to a nearby power station, while another 50 million cubic feet per day is burned, according to a South Gas Company official.[/rtl]
[rtl]The upcoming project will increase the field's gas processing capacity to 150 million cubic feet per day and allow for better fluid capture. According to the materials published by the ship’s captain, there is an option for a second station with a capacity of 150 million cubic feet per day.[/rtl]
[rtl]The project took a major step forward on April 2, when the Iraqi Council of Ministers approved a $3.246 billion sovereign guarantee, according to official meeting decisions seen by Naft Iraq newspaper. The guarantee is “for a period not exceeding 11 years, for the Bin Omar field gas project, after the Ministry of Oil and the South Gas Company amended the contract by preparing an annex to determine the scope of the government guarantee.”[/rtl]
[rtl]Previous efforts to expand gas processing at Nahr Bin Omar have failed, including a deal that was nominally awarded in 2018 to US company Orion Energy but never signed, when current Oil Minister Hayyan Abdul Ghani was SGC's director general.[/rtl]
[rtl]The ship's captain seems to be getting more attention. According to several officials at the Ministry of Oil and Industry, the company's leaders are known to have influence and high-level connections, which is one of the factors that helped the company move relatively quickly through difficult bureaucracy.[/rtl]
[rtl]According to its website, Raban Al-Safina is the Iraqi partner of the German technology company Siemens, and has a factory in Najaf that produces infrastructure for the transmission and distribution of electricity. As for the Ben Omar River project, an industry official said that Raban intends to contract with Honeywell/UOP for the equipment and KBR to manage the project.[/rtl]
[rtl]The Iraqi company also signed a joint venture agreement with British company EthosEnergy in February 2024 to build “a new purpose-built facility near Baghdad,” according to an EthosEnergy press release, including “a service center containing calibration laboratories and gas turbine components.”[/rtl]
[rtl]Iraq is also building a new gas facility at the state-run Nasiriyah field, to process associated gas from that project and the Gharraf field, which is operated by Malaysia's Petronas.[/rtl]
[rtl]The government first signed a contract with engineering firm Baker Hughes in 2018, but the project faced delays, some related to disruptions caused by the pandemic. According to Abdel Baqi, this work is now 60 percent complete. Compressors have also been ordered from suppliers in Italy, via the PEG consortium.[/rtl]
[rtl]Abdel Baqi said that the first phase of the project will raise the gas processing capacity to 67 million cubic feet per day. Ultimately, the facility will have a capacity of 200 million standard cubic feet per day, which Abdel Baqi said is enough to handle the expected associated gas production for both Nasiriyah and Gharraf once they reach their target targets.[/rtl]
[rtl]Iraqi gas officials estimated last year that the first phase of the Nasiriyah gas station would go into operation in 2024, but in his recent interview with the Iraq Oil newspaper, Abdul Baqi did not provide a specific timetable.[/rtl]
[rtl]The project received a financial boost in September 2023, when the Iraqi Council of Ministers voted in favor of a request from the state-run Dhi Qar Oil Company, which manages Nasiriyah and oversees Al-Gharraf, to approve an increase in oil production. The total expected cost of the project. According to a Cabinet statement, the new price of $272 million is 7.3 percent higher than expected.[/rtl]
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