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New hope that Iraq will reduce oil sector emissions. BY WIL CRISP

Large projects to gather associated gas are making progress

Increased investment in large projects to gather associated gas in Iraq has increased optimism that the country is going to make progress in reducing harmful oil sector emissions.

In 2020, Iraq flared more natural gas from its oil fields than any other country apart from Russia, according to a World Bank study published in April, burning 17.4 billion cubic metres (bcm) of gas.

This is the equivalent of 614.5 billion cubic feet a year (bcf/y) and 1.7 billion cubic feet a day (bcf/d).

Iraq’s flaring results in a range of pollutants released into the atmosphere, including carbon dioxide, methane, and soot.

This causes significant damage to the local environment as well as helping to accelerate climate change globally.

Despite Iraq’s fragile political situation and precarious economy, two large projects that will reduce flaring in the country have made significant progress over 2021, raising hopes that the country will significantly reduce flaring over the medium and long term.

The first major project breakthrough was in June, when the International Finance Corporation (IFC) announced that had acted as lead arranger for a five-year $360m loan to Basrah Gas Company (BGC) to help it carry out one of the largest gas flaring reduction projects in the world.

The IFC is part of the World Bank Group and offers investment, advisory, and asset-management services to encourage private-sector development in less developed countries.

BGC is a public-private joint venture made up of Iraq’s state-owned South Gas Company, which is the majority shareholder, along with UK/Dutch Shell and Japan’s Mitsubishi.

BGC is using the IFC loan to execute a series of projects that will gather increasing volumes of gas from oil fields in southern Iraq.

The gas is then processed into natural gas liquids (NGL) that can be easily transported to where consumers need gas or used at power generation facilities.

One of the key projects that is currently underway is the $170m Basrah natural gas liquid extraction plant (BNGL) project.

It will process gas from several large fields in the Basrah region and is expected to see its first train start commissioning by the end of 2022.

If commissioning goes to plan, the first train is scheduled to come online by mid-2023.

BGC is currently understood to be processing around 900 million standard cubic feet a day (cf/d) of natural gas and this is expected to increase by 20 per cent in early 2023 when the first train of the BNGL project comes online.

The facility’s second train is expected to be mechanically complete in mid-2023 and gas will be flowing from the second train into the grid by the end of 2023.

The second large project breakthrough came on 5 September as part of a $27bn umbrella deal between Iraq and France’s TotalEnergies.

The umbrella deal covers four major contracts.

One of these is a project to build facilities to capture and process 600 million standard cubic feet a day (cf/d) of gas at the Artawi field, which is also known as that Ratawi field.

According to official announcements made earlier this month facilities developed under the scope of this project will collect gas from the southern fields of West Qurna 2, Majnoon, Artawi, Tuba, and Luhais.

Iraq’s oil ministry has said that an initial sum of $2bn will be invested in this project and it is estimated that the facilities will produce 12,000 barrels of condensate a day and 3,000 tonnes a day of liquefied petroleum gas (LPG) for the local market.

There are other smaller projects to reduce gas flaring around the country including DNO’s $110m Peshkabir Gas Capture and Injection Project in its Tawke license.

The scheme came online in September 2020 in the semi-autonomous region of Iraqi Kurdistan and is re-injecting associated gas back into oil fields in order to increase pressure and boost production.

On 19 September, Iraq’s oil ministry announced that the US oil field services firm Baker Hughes had signed an agreement to develop a new project in Iraq designed to capturing 200 million cubic metres a day of flared gas for power generation.

The project involves the construction of modular gas processing plants at the Nassiriya and Gharaf oil fields in the southern Dhi Qar province.

Ali Al-Saffar, a Middle East and North Africa programme manager at the Paris-based International Energy Agency (IEA), says that if Iraq is successful in implementing its ambitious plans to reduce emissions from oil fields it could ultimately make the country a more attractive location for Western international oil companies (IOCs), which are becoming increasingly reluctant to be associated with carbon-intensive projects.

“One of the considerations that Western IOCs are increasingly factoring in is the greenhouse gas-intensity of their production,” said Al-Saffar.

“The IEA tracks things like venting, flaring, and leakage – and Iraq does not perform well compared to global standards.”

Over recent years, Iraq has seen significant delays to some projects in the oil and gas sector amid volatile global prices and the impact of the Covid-19 pandemic.

Despite this, Al-Saffar is optimistic that at least some of the recently announced megaprojects will ultimately help to significantly reduce emissions from Iraqi oil fields.

“Though there is still some uncertainty about some of the planned projects to capture gas, I think that the recent announcements are a step in the right direction,” he said.

“Iraq’s oil minister has made it clear that increasing natural gas production is a priority for the country rather than increasing oil production.”

On top of the environmental benefits of these gas gathering projects, Iraq also stands to make significant economic gains if these projects are executed effectively, according to Al-Saffar.

“If all of the proposed projects to capture and process flared gas go ahead it could have the ongoing impact of stabilising electricity supplies, which would be very good for the economy,” he said.

“There is a tremendous amount of good that can come from prioritising natural gas investment to eliminate flaring in Iraq – and it does seem to be the way that this government is moving.”

While planned projects to gather associated gas from Iraq’s oil fields have some momentum right now, there are some fears that these plans could be delayed if the government sees a dramatic transformation during the planned elections in October.

However, even if the elections do cause a setback for the plans to extend Iraq’s gas gathering infrastructure, it is likely that Iraq’s international partners, like the US and Saudi Arabia, will continue to support this type of project in areas like Basrah.

Both the US and Saudi Arabia have made it clear they would like to stop Iraq from importing gas from Iran, and boosting local production is likely to be key to sustainably reducing Iraq’s need for imports.

Source: MEED, 21 SEPTEMBER 2021



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