on September 1, 2010. That has now been delayed a month until October. 1. The reason is to get more energy companies interested.
Iraq is putting up three natural gas fields for bidding. One is Akkas in Anbar that has 5.6 trillion cubic feet of reserves. Another is Mansuriya in Diyala with 4.5 trillion cubic feet of reserves, and the last is Siba in Basra with 1.13 trillion cubic feet of reserves. Akkas and Mansuriya were originally put up for auction in June 2009. Only one company bid on Akkas, but it was rejected, while none showed interest in Mansuriya.
In total, Iraq has an estimated 112 trillion cubic feet of natural gas, the 11th largest amount in the world. It currently produces 1.64 cubic feet of gas per day, 70% of which is flared at oil fields where the gas is produced as part of the extraction process.
48 companies have been pre-approved for the October bidding round. 45 of the businesses are the same ones that participated in the two rounds of auctions in 2009 for oil and gas fields. Three more, TNK-BP, Itochu Corporation and Kuwait Energy were just added.
The reason for the delay, is that the Oil Ministry is concerned about the lack of interest by these corporations. Iraq has huge untapped potential in natural gas, but like its oil industry, doesn't have the infrastructure to fully exploit it. The government for example, is offering the companies the right to export half of the gas produced, but there’s currently no way to do that. The Akkas field is only a few miles from Syria, while Siba borders Kuwait, but there are no pipelines connecting the countries to transport the gas. Iraq also needs storage facilities, better roads, and to provide security. Businesses have also complained that the terms offered by the Oil Ministry are confusing.
Iraq has ambitious plans to develop its energy resources. In 2009 it signed eleven contracts to develop its oil industry. This year it wants to auction three gas fields. If successful, the new deals would not only bring in more money, but also provide fuel for the country’s electricity generators. Like petroleum, the major impediment is infrastructure. If Akkas, Mansuriya or Siba were successfully auctioned off, the corporations may not be able to do anything with the majority of gas produced for years until pipes, reservoirs, roads, etc. were built. There’s also the issue of who would have to pay for all that. That may mean new exploitation of Iraq’s gas reserves will have to wait.
Agence France Presse, “Iraq delays gas bid round until October,” 8/2/10
Hafidh, Hassan, “2nd UPDATE: Iraq Delays Gas Bidding Round Until Oct 1-Source,” Dow Jones, 8/1/10
- “Iraq Needs Gas Infrastructure Investment Before Bid Round – Executives,” Dow Jones, 8/2/10
Yackley, Ayla Jean, “Iraq delays gas bidding round to Oct 1,” Reuters, 8/1/10
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