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    Kurdish gas waits for an export route [NGW Magazine]


The Kurdistan region holds massive gas potential but achieving this will depend greatly on the opening of routes to market. [NGW Magazine Volume 5, Issue 20]

by: Ian Simm

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Natural Gas & LNG News, Asia/Oceania, Insights, Premium, NGW Magazine Articles, Volume 5, Issue 20

Kurdish gas waits for an export route [NGW Magazine]

Editor's note: Natural Gas World Magazine received correspondence from a party who perceived certain parts of the original version of this article, first published in Vol 5, #20, as objectionable. As a courtesy, the article has been revised to remove the content in question.

While international operators in the Kurdistan Region of northern Iraq (KRI) are finally enjoying some predictability about monthly sales payments from the Kurdistan Regional Government (KRG), there remains a cloud of uncertainty over the region.

The KRI was once seen as an up-and-coming frontier play that promised similar scale to Federal Iraq but with fewer corruption and security concerns. However, while the semi-autonomous north received better protection from its own Peshmerga forces than did the areas guarded by the capitulating Iraqi army, the 2014 insurgence of Islamic State (IS) sowed havoc and illustrated the challenges of operating there. 

As the threat from IS diminished, normal business resumed in Kurdistan with Erbil and Baghdad in a seemingly endless argument about the KRG’s budget – a thorny issue since the Kurds began independent exports of oil in 2014.

Erbil is meant to receive a 12.67% share of the total national budget, though this is dependent on the KRG exporting 250,000 barrels/d through Iraq’s state oil marketing company Somo and giving the revenues to the central treasury.

Baghdad cut the KRG’s budget in Q2 following the drop in oil revenues, though a breakthrough in talks is reportedly now close. Meanwhile, with the issue hampering development and the lack of energy sector alignment creating issues in adhering to Opec+ quotas, Iraq’s oil minister Ihsan Ismaael has proposed the creation of a company to oversee Kurdish upstream and export activities with a view to bridging the void between Baghdad and Erbil.

Meanwhile, security concerns have raised their head again recently, with militants mid-October launching rockets at US positions from sites just 10 miles from the KRG’s Banan field. And gunmen believed to have been affiliated with IS shot three Kurdish youths in the disputed Kirkuk province, which separates the region from land controlled by Federal Iraq.

There is also growing concern in the two administrations that IS is exploiting the ongoing civil unrest in southern Iraq and disruption caused by the Covid-19 pandemic to stage a resurgence.


For those willing to stomach the risk, the prize is significant. Estimates from the ministry of natural resources (MNR) peg proven gas reserves at 25 trillion ft³, with resources approaching 200 trillion ft³, although most are unproven.

Unlike southern Iraq, most of the region’s gas resources are not associated with oil and are mainly in central and southern Kurdistan including the Bina Bawi, Chemchemal, Khor Mor, Khurmala and Miran fields.

The concession held by the Pearl Petroleum consortium covers Khor Mor and Chemchemal, progress on which are most advanced, targeting reserves of 4.4 trillion ft³ of gas, 136mn barrels of condensate, 13.3mn metric tons of LPG and 18mn barrels of oil, though participant Dana Gas sees an oil resource upside of 7bn barrels.

Only Khor Mor is in operation: Chemchemal and Blocks 19 and 20 are at earlier phases in the lifecycle. However, Pearl’s output during 2019 ran at 390mn ft³/d of gas, 15,000 b/d of condensate and 1,000 mt/day of LPG, giving a combined total of 96,000 boe/d, supplying about three quarters of Kurdistan’s power generation needs.

The consortium intends to invest $487mn by 2022 in the so-called KM250 project, which will add 250mn ft³/d of gas processing bringing the total capacity to 640mn ft³/d in 2022. Dana has also spoken of ramping this up further to 900mn ft³/d by 2023. The partners are unsurprisingly keen to produce more and in short order: the KRG is entitled to 305mn ft³/d free of charge, according to the concession agreement.

According to Dana’s CEO Patrick Allman-Ward, Khor Mor and Chemchemal are “likely be the biggest gas fields, not just in the KRI, but the whole of Iraq, making them world-class assets”. And with the region’s drilling success rate estimated at 60%, existing reserves are only likely to increase.

Route to market

However, increasing production from these reserves will require the development of infrastructure that is still missing. While output from Khor Mor and soon Chemchemal has an export pipeline to the Bazian and Erbil pipelines, other assets – including the Bina Bawi and Miran gas fields in which London-listed Genel Energy holds 100% ownership – remain stranded.

These have so far received the most attention in the context of a planned integrated gas export project entailing the development of the fields’ estimated 14.8 trillion ft³ of gas and the installation of an export pipeline to Turkey.

However, despite some signs of progress in the form of gas-lifting agreements with the KRG in early 2018, the politically-sensitive project stalled.

In its Q12019 financial results, Genel said it was willing to proceed alone if necessary with the upstream oil element while in the meantime reducing investment. “As there remains limited visibility on the gas developments at Bina Bawi and Miran, spend has been minimised, with the focus on completing the field development plan (FDP) for Bina Bawi oil,” it said. The company has now firmly shelved these plans, with focus turning to oil production from the Sarta block, where it acquired a stake early last year.


While Kurdish gas continues to be exclusively consumed within the region, a 2013 agreement remains in place to pipe sales gas to Turkey and supplement the region’s share of the Iraqi budget. This is predicated on a commitment by Russia’s Rosneft to build a gas pipeline, possibly as big as 30bn m³/yr, to run parallel to the existing oil pipeline. It would connect facilities south of Erbil to a line owned by Turkey’s state-owned Botas, which is capable of moving 20bn m³/y.

Rosneft’s commitment came in 2018, when it issued an advance of $3bn to Erbil for future oil supplies. Around $1.8bn of this has now been converted into a 60% stake in the region’s independent oil export pipeline to Turkey.

While there has been no announcement of progress on the pipeline initiative this year, Russia appears to remain committed to Kurdistan. Its ambassador to Iraq Maxim Maximov has announced that the Al Mansouriya gas field in the Diyala governorate would be the focus of significant Russian investment.

For Moscow and Rosneft, Kurdistan is a largely political play, strengthening ties in the region and opening up a potential new supplier of gas to Europe, over which it will hold significant control. However, for the Pearl Consortium, conduit connectivity is a very pertinent concern, and with few positive noises emanating from Rosneft over the past year, it should come as little surprise that the partners are considering developing their own 100-km link to the Turkish border.