Iraq's oil ministry has signed a final deal with Korea Gas Corp. (KOGAS) to develop its Akkas gas field in the western province of Anbar, according to Reuters.
Along with Kazakhstan’s KazMunaiGas, KOGAS won the rights to develop the Akkas field during Iraq’s third energy bidding round last October. But KazMunaiGas pulled out of the deal in May, forcing KOGAS to double its share in the project.
"Development of Akkas gas field will provide a source of power generation and open the way for establishing a promising petrochemical industry," said Ahmed al-Shamma, Iraq's deputy oil minister, during a signing ceremony on Thursday.
The signing of the Akkas deal was delayed for months by a dispute between the Iraqi government and provincial officials in Anbar, which included the issue of possible gas exports to Syria.
Anbar's deputy governor said his province has made demands as a condition for backing the deal, including building a power station near the field, a gas pipeline to supply a nearby thermal power station and the processing of gas inside Iraq.
"Definitely if these demands are met by the oil ministry, the Akkas project will get support from people of Anbar province," Fouad Chetab, the deputy governor, said at the signing ceremony.
Abdul-Mahdy al-Ameedi, director of the Iraqi oil ministry's contracts and licensing directorate, told Reuters that, under the terms of the contract, surplus gas produced from Akkas could be processed in Syria.
"It will not be acceptable to shut down the field if gas produced from Akkas overcomes (the) capacity of the gas processors we have. Under the deal, gas could be sent to the nearby Deir al Zour gas processor in Syria," Ameedi said.
Iraq has said the priority for the gas will be domestic consumption, mainly for power generation, but has left open the possibility of allowing exports once domestic needs are satisfied. Akkas has the country's largest with reserves of gas, with 5.6 trillion cubic feet.
According to Iraq Oil Report, the company must pump 400 million cubic feet per day within seven years, and maintain that output for 13 years. It will earn costs plus $5.50 for each barrel of oil equivalent produced.
(Sources: Reuters, Iraq Oil Report, Associated Press)