Complex Made Simple

Europe identifies Iraq as major gas supplier

Western Europe is likely to be drawing increasingly on Middle East, and particularly Iraqi, gas supplies within the next five years. A memorandum of understanding on energy co-operation between Brussels and Baghdad was signed in April following the visit to the EU by Iraq's Prime Minister Nuri Al-Maliki and Oil Minister Hussain al-Shahristani.

The EU wants to urgently to diversify gas supplies away from Russia’s Gazprom, which currently provides 40% of its requirements.

For its part Iraq has pledged to initially supply five billion cubic metres of gas a year to Europe with the likelihood of much more in the future.

Connecting fields in western Iraq to a planned Arab Gas pipeline would enable Baghdad to supply gas to the planned Nabucco pipeline to be run through the Balkans to a distribution centre in Austria.

EU external relations commissioner Benita Ferrero-Waldner says that ‘Iraq is a natural energy partner for the EU, both as a producer of oil and gas and as a transit country for hydrocarbon resources from the Middle East and Gulf to the EU.’

Iraq’s huge gas reserves are estimated at more than three trillion cubic feet, bigger than those in the North Sea and larger than those of Algeria or Egypt, but little exploration has yet been conducted into the exact potential.

Akkas field reserves

One of the most encouraging finds has been the Akkas field, close to the border with Syria, which is believed to contain up to seven trillion cubic feet of gas – representing up to 6% of Iraq’s estimated 112 trillion gas reserves.

The field is expected to produce up to 50 million cubic feet a day of gas by 2011 with a potential to expand production nine-fold.

Some 35 companies have been granted access to the Akkas field, 40km from the Syrian border, of which 11 are European.
these include France’s Total, Norway’s StatoilHydro and Italy’s Edison as well as Royal Dutch Shell. The latter has been conducting long-term production tests on five appraisal wells drilled in the field.

An improving security situation since last summer has also encouraged international oil companies to look again at the area, which includes the country’s western deserts.

The Akkas field is close to existing facilities in Syria where Shell has long established joint venture operations.

Damascus also wants to revive an agreement signed with the former regime for gas supplies from the Akkas field. Observers see these factors as placing Shell in an advantageous position.

In addition, the company is discussing taking a 49% stake in a $3bn-$4bn venture involving Iraq’s South Gas Company to harness gas currently flared from pumping operations in southern Iraq.

Shell is believed to have made a proposal for gathering the flared gas to supply both the domestic and export markets with the latter piped to the Turkish port of Ceyhan on the Mediterranean.

See also:
Oil prices propel GCC inflation surges
Oil producers resist production hike calls