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    Gas from Akkas [NGW Magazine]


Iraq is holding talks with potential international partners in the west of the country to increase gas production and so cut gas and power imports from Iran. [NGW Magazine Volume 5, Issue 16]

by: Ian Simm

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Natural Gas & LNG News, Middle East, Top Stories, Insights, Premium, NGW Magazine Articles, Volume 5, Issue 16, Iran

Gas from Akkas [NGW Magazine]

News broke in May that Iraq would allow companies from neighbouring Saudi Arabia to invest in the development of Akkas, the country’s largest non-associated gas field. The announcement by finance minister and acting oil minister Ali Allawi was aired by Saudi Arabian news channel Al Arabiya, and quickly generated headlines about Saudi Aramco, the world’s largest oil producer, making its first steps into the development of overseas assets in the upstream sector.

However, the talks had been running since at least August 2019, when a deputy minister, Hamid al-Zawbai, said Baghdad was speaking to Aramco and Saudi Basic Industries Corp (Sabic) for Akkas and the planned Nebras petrochemical complex, respectively. Since then, Aramco has acquired 70% of Sabic in a $69.1bn deal.

Despite the high-level sign-off, Muhammed Abed Mazeel Al-Aboudi, director general of the reservoirs and fields development directorate at Iraq’s ministry of oil (MO) told NGW in late August that “Aramco [has] not yet discussed the project with us.”

Noting that Akkas remains “on the table”, Al-Aboudi explained that the ministry is “looking for partner for [current operator, South Korea’s] Kogas,” adding that the Koreans have been asked to start production from the field or to leave. He added that there has been interest from US companies and while discussions are “going forward” on multiple fronts, Akkas will be awarded to international companies.

Akkas in focus

The field is around 30 km from the Syrian border in the restive Anbar Province of the Western Desert. Few wells have been drilled in the area, but the Akkas-1 well revealed 3,133 metres of predominantly siliciclastic sequence.

The field’s resource is estimated at 5.6 trillion ft³ (159 bn m³), with recoverable reserves thought to be around 3-3.5 trillion ft³.

Akkas was awarded to a joint venture between Kogas and Kazakhstan’s state KazMunaiGas during the 2010 licensing round, with the partners awarded a technical services contract with a remuneration fee of $5.50/barrel of oil equivalent (boe). This anticipated achieving 400mn ft³/d of production, but the field’s location has been an obstacle to progress.

Anbar anxiety

In 2013, work was suspended for three months when an armed group attacked facilities at Akkas, killing three members of staff and kidnapping two others. Progress was again halted between 2014 and 2017 when Anbar fell under Islamic State control.

Following the militant group’s expulsion, in November 2017 the MO requested that Turkey’s TPAO and Kogas resume work. This was followed by the award by the Korean firm to UK-based Petrofac of a contract to modify the front-end engineering and design (Feed) for the field’s gas plant.

Given the situation in Anbar, announcements of oil and gas developments are few and far between. In November 2019 though, Russia’s Stroytransgaz Oil was awarded a 35-year exploration and production deal for Block 17, north-west of Samawah. This was noteworthy because first, Stroytransgaz is a pipeline rather than exploration specialist; and second, Block 17 was previously unheard of, and appears to have been recently re-designated along similar lines to the pre-Gulf War Block 4. The Russian firm signed a deal during Saddam Hussein’s reign, though this was never ratified.

The block covers an area through which a $5bn, 1mn b/d oil pipeline was expected to run, carrying oil produced from the Rumaila oilfield in Iraq’s Basra Province to the Jordanian port of Aqaba. This would perhaps have explained Stroytransgaz’s involvement, but Jordan and Iraq agreed on a revised route via Najaf rather than Haditha in 2016, and the MO invited expressions of interest in an engineering, procurement and construction contract for the Basra-Najaf string but the project has since stalled. The Jordanian cabinet approved the pipeline in principle in February last year.

Development plans

Despite the historic instability, Baghdad is keen to press on with the development of its Western Desert gas resources. Through his own social media network, Al-Aboudi said in July that despite safety guarantees from the local and central government, Kogas remains “concerned [about proceeding…] with the development of the field (the Upper Khabour only)”.

He added that the MO “will ask other international companies very soon to develop the field” with the option to extend to the Lower Khabour, Akkas and Hot Silurian formations and/or neighbouring blocks to reach a plateau of 1bn ft³/day.”

Al-Aboudi noted that “the reservoirs & fields development directorate encourages all international companies to ask the petroleum contracts and licensing directorate about the field and neighbouring opportunities. We estimate huge dry gas and gas condensate reserves.”


The development of Iraq’s gas fields will be key to the country weaning itself away from continued dependence on supplies from Iran to power the domestic electricity grid. This comprises around 1mn ft³/d as well as 1.2-1.5 GW of electricity, for which it has relied on rolling sanctions waivers from the US.

Historically, Iraq has been one of the world’s worst culprits for natural gas flaring, lacking connectivity to transport and thus monetise much of the associated gas from oil production. Baghdad’s focus has historically been drawn to the production of oil, given its comparatively low storage and transport costs.

However, efforts are afoot in Baghdad to change this, with the most notable being the South Gas Utilisation Project (SGUP) on which a final investment decision was taken by Anglo-Dutch major Shell early last year.

At the heart of SGUP is a $17.5bn project under development by the Basra Gas Co, a joint venture of state-owned Basrah Oil Co, Shell and Japan’s Mitsubishi, which will treat, process and distribute associated gas from the giant Rumaila, West Qurna 1 and Zubair oilfields.

Meanwhile, in January this year, Baghdad approved the award of six blocks in the south-west and south-east of the country that had been provisionally licensed in April 2018. The licences were apportioned to a mix of Chinese and Emirati companies, with the majors passing up on the opportunity to bid in the 11-block licensing round.

The acreage apportioned was highlighted by the Gilabat-Qumar and Khashim Ahmer-Injana non-associated gas fields, which went to Dana Gas affiliate, Crescent Petroleum. The company has extensive experience of operating assets in the Kurdistan Region of northern Iraq, and its award marked a notable shift in policy, with Baghdad historically reluctant to allow firms to operate assets in both Kurdish and federal territory.

Former prime minister Adel Abdul Mahdi said at the time that the acreage awarded would allow for 750mn ft³/day of gas production by 2023, partly replacing Iranian gas imports. However, with little work having so far been carried out on the fields, it appears unlikely that they will be capable of replacing imports from Iran soon.

Sum of the parts

Meanwhile, Al-Aboudi also spoke of the potential of the Al-Mansouriyah gas and condensate field, which is being fast-tracked into production. The field is in Diyala province, 110 km north-east of Baghdad, with the first phase being developed to produce a combined 100mn ft³/d of gas.

Al-Mansouriyah was awarded to a consortium led by Turkish state petroleum producer TPAO during the 2010 licensing round, with Kuwait Energy Co (KEC) and Kogas taking minority stakes. The consortium accepted a remuneration of $7/boe.

Al-Aboudi said: “Target plateau production is 320mn ft³/d. The field was returned back to the Midland Oil Co. due to the situation in the area. Currently the area is under the control of the Iraqi Army and safe to work.” Upon reaching their respective plateau production levels, the combination of Akkas and the Al-Mansouriyah could provide around 700mn ft³/d of gas.

Meanwhile, Baghdad has plans to complement its existing electricity supplies by connecting the Iraqi grid to that of its Gulf neighbours, further emphasising the pivot away from Iran. The announcement follows an agreement by Jordan and Saudi Arabia to connect their grids.

Speaking to the Washington, US think-tank Atlantic Council late August, Allawi said that Iraq would “significantly” reduce its reliance on its eastern neighbour. In a nod to the challenge of replacing the large volumes of energy it now imports from Iran, Allawi said: “It is unlikely we can find a short term substitute”, but suggested that the Gulf grid hook-up could be a “medium-term” solution. He added: “The dependence on Iranian electricity and energy will begin to trail down significantly sometime next year.”

Iraq has also recently agreed contracts with US firm GE and Siemens of the US to overhaul the country’s electricity grid. Perhaps on completion of these projects, in addition to expected progress at Akkas, Al-Mansouriyah and other smaller gas fields, Iraq will be capable of weaning itself off supplies from its eastern neighbour.