By John Lee.
In an interview with Reuters, the chief executive of Kuwait Energy says the company is committed to pumping gas and finding oil in southern Iraq, and will not risk aggravating Baghdad by pursuing deals in Iraqi Kurdistan.
Sara Akbar (pictured) said strong ties with Baghdad are core to its strategic investment in southern Iraq.
"It's very simple. From the beginning, our ambition was to be able to develop gas in Iraq and to export some of that gas to Kuwait. The time is not right now [for exporting gas to Kuwait], because Iraq needs gas for itself.
"In the future, we hope to be able to do so. And for that, we need our relationship to strengthen and develop with Baghdad. And that will achieve our objective rather than working against them and being in Kurdistan."
Iraq briefly exported gas to Kuwait from the mid-1980s until it invaded in 1990. The export of Iraq's gas is still sensitive today because Baghdad still can supply only a few hours of power each day.
Kuwait Energy, along with Turkish state-owned TPAO, won a contract to develop the Siba gas field, near the Kuwaiti border; it also secured a stake in the Mansuriyah gas field in Diyala, near the Iranian border, where TPAO is operator; and exploration Block 9, which straddles the border with Iran, and in which Dragon Oil is its minority partner.
Akbar sees Siba as "a very logical project that will tie the two countries together". Production from Siba and Mansuriyah is on track to start up in the first half of 2014. The company plans "heavy expenditure for Iraq this year and next", she said.
About $400 million will be spent over the next two years to drill wells and build pipelines and surface facilities at the gas fields. A further $125 million is targeted for fast track exploration at Block 9.
As Iraq's diplomatic ties soured with Turkey, it asked Kuwait Energy to acquire the shares in Block 9 from TPAO, which the cabinet decided to expel. Akbar said she did not expect Baghdad to force TPAO out of fields such as Mansuriyah and Siba where it's already at work.