20 March 2008
The Iraqi oil ministry is tendering a contract to build a pipeline linking the Akkas gas field in northwest Iraq to the Syrian border with the aim of starting exports to Syria within a year of contract award, a senior Iraqi official said Wednesday.
Akkas was discovered in the late 1990s, and six wells were drilled there by a Syrian contractor before the US-led invasion in 2003. Under a first phase of development, Iraq’s State Co. for Oil Projects (Scop) hopes to send gas to Syria for processing according to a government-to-government agreement reached last year. Around 50 million cubic feet per day will be produced and exported in the first phase, Scop Director-General Falah al-Khawaja told International Oil Daily from Baghdad. Ultimately, the field could produce about 500 MMcf/d.
Al-Khawaja said Iraq hopes to award the pipeline contract in the next month. Work will involve building a 36 kilometer link to the border, where the Syrians will lay a pipe connected to a processing plant run by Al-Furat Petroleum Co.
Longer term, development of Akkas will be open to international oil companies as part of the first upstream licensing round planned by the ministry for later this year.
Royal Dutch Shell, the Al-Furat operator in Syria, has already expressed interest in development with an eye to exporting the Akkas gas to Europe via the Arab Pipeline project. Right now, the pipeline links Egypt, Jordan and Syria, and it could be extended to Turkey and Western Europe.
“The infrastructure for the gas production will be built by Scop and North Oil Co. will carry out workovers at the drilled wells,” al-Khawaja said. As part of the deal, Iraq will finance some of the gas processing costs and get liquefied petroleum gas (LPG) in return, he added. Financial terms have not been settled, but he expects Syria to pay market prices for the gas.
Iraq is desperate for natural gas to feed power stations and industrial facilities. About 800 MMcf/d of associated gas from southern oil fields is being flared — enough to double the country’s power generation capacity — while just 400 MMcf/d is being processed.
Amid criticism over lack of fuel or gas for power generation and lengthy blackouts, especially in the Baghdad area, the oil ministry has accelerated plans to rehabilitate existing processing facilities and build new ones.
According to al-Khawaja, Scop has awarded contracts to the Italian division of GE Oil and Gas to renovate compressors, as well as to build new compressors and gathering stations in the West Qurna and Zubair fields. Gas will be collected at a nearby natural gas liquids plant.
The ministry is now studying a Shell proposal to gather and commercialize some 500 MMcf/d of flared gas from the southern oil fields. The Anglo-Dutch supermajor has been eyeing a long-term gas deal with Iraq since the fall of Saddam Hussein in 2003. It developed a gas master plan in 2006 that looked at Iraq’s gas potential and made recommendations to the oil ministry on how best to use the gas both long and short term.
As part of the effort to make gas development and production a priority, the ministry also plans to include the Mansouriah gas field, northeast of Baghdad, in the first licensing round, al-Khawaja said.
Four wells were drilled in Mansouriah before the war and development could be challenging, as the gas field lies above an oil rim. If sufficient volumes of oil reserves are confirmed, Mansouriah would be reclassified as an oil field with a gas cap. It would take special processes to extract the gas without affecting oil recovery.
It is estimated that Mansouriah could produce 250 MMcf-300 MMcf/d, and Iraqi officials say its location near the capital means it could help solve the power generation problems afflicting Baghdad and surrounding areas.
By Ruba Husari, Dubai
(Published By International Oil Daily March 20, 2008)