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By John Lee.

Daewoo Engineering and Construction has won a $709-million contract to upgrade the Akkas gas field in Anbar province, near the Syrian border, the Iraqi cabinet secretary announced.

The South Korean company will provide engineering, procurement, construction and commissioning of a central processing facility in the field.

Construction of the new facility is planned to take 46-and-half months from start to completion.

Along with Kazakhstan’s KazMunaiGas, KOGAS won the rights to develop the Akkas field during Iraq’s third energy bidding round in October 2010, but KazMunaiGas pulled out of the deal months later, forcing KOGAS to double its share in the project.

The contract stipulates a production plateau of 400,000 Mcf/day for a remuneration fee of $5.50/barrel of oil equivalent, with the plateau output to be maintained for 13 years.

(Sources: Dow Jones, Reuters)

By Tom Walker, Director, Assaye Risk

COUNTRY OVERVIEW

After the hiatus of last week Iraq has once again seen increased levels of violence, especially in Baghdad province and along the Tigris River valley, with the ISF and provincial politicians from both sides of the sectarian divide bearing the brunt of the violence.  In line with previous weeks reporting it is becoming increasingly clear that the Sunni insurgency  - especially ISI - are now more than capable of mounting sustained operations over and above that of previous years by deploying multiple high impact devices in concert nationwide.  With the looming provincial elections and continued political churn it should be expected that this attack tempo will continue as insurgents continually migrate across the national stage reinforcing and resupplying where necessary in order to maintain as much pressure as possible.   By close of play 02 April the approx. number of countrywide fatalities was at 105 with estimates of wounded at 370; bringing the total ISF and civilian fatalities this year to approx. 1018.

Similar security themes dominated national and international reporting with the PKK ceasefire, Syria and the provincial elections at the forefront of political dialogue this week. Ankara’s efforts to close with the PKK engineered ceasefire and troop withdrawal were dealt a blow this week as the PKK sought legal assurances from parliament that they would not be attacked by the military during their withdrawal from Turkish territory to their operating bases in the Qandil Mountains.  This step was seen as vital to taking the process forward, especially given the previous instances where PKK forces have been attacked during ceasefire withdrawals, most notably in 1999 after the arrest of Abdullah Ocalan.  Prime Minister Erdogan has sought to assuage PKK fears but has however stopped short of offering legal protection on the grounds that it is against current legislation.  Instead he continues to seek a situation whereby the PKK disarm prior to any move in order to mitigate against unnecessary skirmishing with the Turkish military, however this has yet to accepted by the PKK who fear the vulnerability and obvious consequences of being unarmed against an old foe.

The provincial elections and associated violence reached new levels this week as candidates and officials continue to be subjected to an intensified campaign of violence and intimidation.  Numerous attacks were reported across the northern and central belts as the debate surrounding the demonstration movement and election impasse in Al-Anbar and Nineveh intensifies.  The protest movement this week announced they had formed an official delegation to negotiate terms with the GoI in a move widely seen as the movement distancing themselves from political blocs that had been negotiating on their behalf, but who had not managed to gain any purchase with Prime Minister Maliki.  How this dynamic unfolds remains to be seen however Baghdad will remain ever aware that the less influence they have in the western provinces the safer and more suitable the operating environment will become in favour of Sunni insurgent groups operating between the Syrian conflict and operations in Iraq.

In a departure from the norm of attacking Iraq’s energy infrastructure 01 April saw gunmen attack a Korean contracting company in the Akkas gas field, killing at least three local workers and kidnapping two more.  Whilst this event does not represent a clear intent to now continuously attack western interests  it does point towards a strengthening insurgent presence in the western desert regions.  The ISF confirmed this in a statement to Reuters stating that they see a renewed vigour in ISI units who have regained ground in the remote hills, caves and villages that straddle the Syrian border.

By John Lee.

The Korean Gas Corporation (KOGAS) said on Wednesday that an attack on its operations at the Akkas gas field in Anbar will not delay its plans to start commercial production in September 2015.

A spokesman for the state-run company told Platts:

"There was no major damage to the facilities at the field, and there will be no delay to the original plans ... We will take measures to protect gas fields in Iraq from attacks.

"There were no South Korean casualties. Kogas has dispatched no staff because the Akkas project has not started yet."

On Monday, two local contractors were killed and another was kidnapped during the attack by a group of 20 gunmen in the al-Ibrahimi area, 460 kilometers west of Baghdad, where subcontractor Baider al-Arab has been building a power plant.

The Akkas field, which holds an estimated 5.6 trillion cubic feet of gas, and is the first non-associated gas field to be developed in Iraq, is due to start commercial production in September 2015. "Kogas plans to produce up to 400,000 Mcf/day," the company official said.

Along with Kazakhstan’s KazMunaiGas, KOGAS won the rights to develop the Akkas field during Iraq’s third energy bidding round in October 2010, but KazMunaiGas pulled out of the deal months later, forcing KOGAS to double its share in the project.

The contract stipulates a production plateau of 400,000 Mcf/day for a remuneration fee of $5.50/barrel of oil equivalent, with the plateau output to be maintained for 13 years.

(Sources: Platts, Reuters, Iraq Oil Report)

By John Lee.

Japan’s International Cooperation Agency (JICA) has told Utilities Middle East that reports that the organisation had agreed a US $2 billion loan for the construction of a new Iraqi power plant are inaccurate.

Japan’s principal overseas development agency, was reported by both KUNA and AIN to have agreed the massive loan to help finance the new 1,800 MW Nassiriyah power plant.

The organisation told Utilities-ME that the most recent Japanese Official Development Assistance (ODA) loan to Iraq was a $1.12 billion agreement for three projects in the first quarter of 2010.

This included a Water Supply Sector Loan Project to upgrade and construct water facilities to ensure potable water supplies to Anbar, Ninawa and Salah ad-Din governorates, together with the construction of the Al-Alkkaz [Akkas?] gas power plant project in Anbar.

The loan also covered the construction of the Deralok hydro-electric plant in Kurdistan’s Dohuk governorate.

(Source: Utilities Middle East)

SGS has been awarded a three-year contract by India's Lanco Group [Lanco Infratech, LANCI] to manage on-site quality control for the construction of its new gas power plant in Anbar Province, Iraq. The AKAZ [Akkaz, Akkas] power plant at al-Qaim will have a capacity of 250MW (2x 125MW) and is estimated to require three years to complete.

Under the deal, SGS will inspect material and equipment on-site, as well as at manufacturer locations in Europe, the US, Asia and the Middle East region.

Lanco signed the agreement to build the plant in June 2011.

(Sources: SGS, Utilities-ME)

Iraq's Oil Minister, Abdul Kareem Luaibi [Elaibi], has held talks with his Syrian counterpart Sufian Allaw (pictured), according to the Syrian official SANA news agency.

The talks focused on reopening the old Iraqi oil pipeline and enhancing cooperation between the two ministries.

The two sides also discussed the possibility of benefiting from the gas available from the Akkas field, near the Syrian border, in addition to cooperation in oil exploration.

In May 2010, Allaw and Luaibi conferred on shipping the Iraqi crude oil and gas through the Syrian territories using the Kirkuk- Banias pipeline.

The Iraqi minister arrived in Damascus on Saturday in a delegation headed by Iraqi President Jalal Talabani.

(Source: Xinhua)

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)

Iraq's cabinet has approved a contract with South Korea's KOGAS to develop the Akkas [Ukaz] gas field in western Anbar province, the country's largest, according to a report from Reuters.

The cabinet approved the deal on Sept. 13 and the source said it will be signed Oct. 15.

"Final signature of Akkas gas deal with Kogas will take place Oct. 13," Sabah Al Saidi, deputy head of the Iraqi Oil Ministry's petroleum contracts and licensing directorate, told Dow Jones Newswires.

Iraq asked KOGAS to develop Akkas on its own after Kazakh company KazMunaiGas pulled out.

(Sources: Dow Jones, Reuters, AKnews)

Lanco Infratech Ltd. (LANCI) of India signed an $81.3 million contract to build a gas-fired, 250-MW power station in western Iraq.

Masaab Serri, an Electricity Ministry spokesman, told Bloomberg that the company is scheduled to build the plant within 16 months in Al-Qaim, in Anbar province in western Iraq, using natural gas from the nearby Akkas field, which the Iraqi government has recently awarded to Korea Gas Corp (KOGAS).

The country sought bids this year to build more than 60 generation plants to add more than 14,000 megawatts to the national grid. Iraq currently produces 7,000 megawatts and imports 1,000 megawatts while domestic demand totals about 14,000 megawatts, Iraqi Electricity Minister Raad Shallal said in April.

(Sources: Dow Jones, Bloomberg)

Reuters reports that Iraq signed the final contracts on Sunday to develop its Siba and Mansuriyah gas fields in deals involving Turkish, Kuwaiti and South Korean companies that will help diversify the country's fossil fuel production.

The Korean Gas Corporation [KOGAS] signed the deal for the Akkas gas field earlier in the week.

"This is a new beginning for the Iraqi energy industry as it is the first time we are developing Iraqi gas fields. We are seeking to meet the needs of our power stations and to make Iraq one of the leading exporters of gas in the world," Oil Minister Abdul-Kareem Luaibi [Elaibi] said at the signing ceremony in Baghdad.

• Akkas, near the Syrian border, is the largest of the three fields at 158bn cubic metres, and it went initially to a joint South Korean-Kazakh bid from the Korean Gas Corporation [KOGAS] and Kazakhstan company KazMunaiGas. KazMunaiGas later pulled out of the project, and KOGAS took over its stake. It will produce 400 million standard cubic feet of gas a day at a price of $5.50 per barrel of oil equivalent.
• The Mansuriyah field in the volatile Diyala province in central Iraq, which stretches east to the Iranian border, has been won by Korean Gas Corporation [KOGAS], Turkey’s TPAO and Kuwait Energy. It holds around 127bn cubic metres of gas. They committed to produce 320 million standard cubic feet of gas a day for $7 per barrel of oil equivalent produced, the maximum the government would agree to pay.
• Siba, on the Kuwaiti border south of Basra, is by far the smallest of the three fields at only 2.9bn cubic metres. Kuwait Energy and TPAO won the bidding here, agreeing to produce 100 million standard cubic feet of gas a day at a price of $7.50 per barrel of oil equivalent. TPAO has said the partners expect to invest $1 billion in the Siba field.

(Sources: Reuters, Bloomberg)