Iraq prepares to import Iranian gas as export hopes recede

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Electricity consumers in Iraq can look forward to some respite from supply shortages from next month when the nation starts to import natural gas from Iran. At the recent World Energy Congress in Daegu, South Korea, Iraq’s Deputy Prime Minister for Energy, Dr. Hussein al-Shahristani, told Gastech News that – after some delay – construction of the pipeline that will carry the gas should be completed soon.

However, gas-consuming countries hoping to import gas from Iraq will need to temper expectations, the minister added, given how quickly demand within Iraq is expected to grow.

Iraq has been negotiating with the Iranians to import gas through two pipelines, the first of which will serve the central part of the country, including Baghdad, and the second of which will serve the south of the country around Basra.

Ready next month: “We have signed contracts with Iran to import gas for our power generation stations in the central part of the country,” said al-Shahristani, “and we are about to sign another contract to import Iranian gas in the south of the country. These are short-term contracts just to give us time to run our new power stations on gas until our oil production is increased to a point where we have sufficient associated gas to be used for our own domestic needs.

“The pipeline that we have already signed the contract for is under construction. It should have been finished by July last. It wasn’t. Now the Iranians tell us it will be ready next month.”

The contract covering gas supply to the Baghdad area is for 850 MMcf/d over a period of ten years, said the minister. All the gas is destined for electricity generation. The initial capacity of the new pipeline will be 850 MMcf/d but this is to be increased. “The Iranians need compressor systems on their side to be able to boost the pressure and the quantity,” added al-Shahristani.

“The contract that we are negotiating with the Iranians for the south – in the Basra area, again purely for power generation – is a bigger pipeline. The contract has not been signed, but the offer that we have received was that they would be able to lay it down in 6 months.”

Iran the only possibility: While the Middle East region is blessed with large reserves of conventional natural gas, the bulk of these are in Iran and Qatar. Most other countries in the region are struggling to meet fast-rising demand for gas. So Iraq had little choice but to approach Iran for new gas supplies. “Qatar has already committed its gas in long-term contracts,” said the minster, “and there isn’t much Qatar gas available for the region. Iran is the only other possibility.”

Until relatively recently there were hopes that post-war Iraq would become a big exporter of natural gas, perhaps to Europe and perhaps to some its neighbours in the Middle East.

20 GW of new power generation – all gas-fired: However, when Gastech News asked the minister what the current thinking was around future gas exports, he replied: “Iraq has a very large programme of building new power generation. So far we have signed contracts for 20 GW of new power generation and there will be more. All these power stations will be fired by gas.

“As we increase our own production and the associated gas is increased, we expect by 2017/2018 we’ll be meeting all our gas needs for our domestic power plants. Beyond that date there will be surplus gas for export.

“All our neighbours, with the exception of Iran [and Qatar], have asked Iraq to supply them with gas. So has the European Union. However, that surplus Iraqi gas will be available for perhaps five to ten years. Beyond that, as our economy develops, as our local consumption increases, we’ll have to see if we find new gas fields. If not, we’ll be needing more gas domestically.”

by Alex Forbes, Daegu, South Korea

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Listen to Press conference with Dr. Hussein Al-Shahristani at the World Energy Congress