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    Iraq Cannot Stop Iranian Imports Before 2021

Summary

Iraq will need Iranian gas for at least two years as its own production slowly rises.

by: Dalga Khatinoglu

Posted in:

Natural Gas and LNG News, Middle East, Corporate, Import/Export, Political, Ministries, News By Country, Iran, Iraq

Iraq Cannot Stop Iranian Imports Before 2021

A top Iraqi official said that the country is unable to stop Iranian gas import at least for two years, local media reported December 6. State-run Southern Gas Company CEO Hayyan Abdul Ghani told reporters that the country would take that long to boost gas output by 45% to 13.4bn m3/yr.

Iraq said recently it could get a 45-day US sanctions waiver on Iranian gas imports, but  says more time is needed to replace the 28mn m3/day it now receives, contractually.

Iraq flares 17.85bn m3/yr associated gas. It established Basrah Gas Company (BGC) joint venture in 2013 with $17bn of projects to cut flaring. Local state-owned South Gas Company holds 51% stake, Anglo-Dutch major Shell 44% and Japan’s Mitsubishi has 5%  in BGC. Recently Iraq’s oil ministry announced that BGC could increase gas capturing level to 10.85bn m3/yr this year and the volume is expected to reach 14.5bn m3/y by 2020. Almost all of Iraq’s production is associated with oil output.

Ghani reportedly said that Iraq signed a $367mn deal with US General Electric in April, to collect 1.63bn m3/yr associated gas by 2020. “Iraq is also preparing to seal another contract in early 2019 with a foreign company to add 3.1bn m3/yr by the end of next year,” he said. If all of the listed projects complete in time, it seems Iraq’s gas production would exceed Ghani’s announced 13.4bn m3/yr by end-2020. BP put last year’s production at 10.5bn m³.

Ghani also said that the country plans to increase gas production to 20.67bn m³/yr by end-2023, including BGC’s projects. Last week’s gas import disruption – which is continuing – caused massive power outages in Baghdad and other cities. Iraq says it pays for Iranian gas imports without using US dollars. According to the contract, Iraq’s commercial bank has to pay in euros. Iraq has two agreements to import 25mn m3/d gas, one to supply Baghdad and the other Basrah.