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Iraq signed an agreement with the Korea Gas Corporation (KOGAS) to begin developing the Akkas natural-gas field, an Oil Ministry official said, ending seven months of delays in progress at one of the country’s biggest deposits of the fuel.

Representatives of KOGAS and Iraq's Ministry of Oil signed the contract on Wednesday in a ceremony closed to the media, Sabah Abdel Kadhim, the deputy head of the Oil Ministry’s licensing department, said in a telephone interview with Bloomberg.

KOGAS agreed to double its stake in the project to 75%, up from 37.5% previously, following KazMunaiGas's unexpected withdrawal. Iraq’s state-run North Oil Company will hold the other 25%.

The government expects to sign agreements for two other gas fields at Mansouriya and Siba on June 5.

(Sources: Bloomberg, Reuters)

KOGAS, the Korea Gas Corporation, will double its commitment to develop Iraq's Akkas gas field, according to a report from the Wall Street Journal.

The move follows the withdrawal of its partner, Kazakhstan state gas company KazMunaiGas, from the project.

Kogas, will now have a 75% stake in one of Iraq's largest gas projects, up from 37.5% previously. Iraq's state-run North Oil Company will hold the other 25%.

The company plans to invest about $2.66 billion in the Akkas project over a 20-year period, a company official said. But that estimate is based on an assumption that Kogas keeps the entire 75% stake in the project, the person said.

After a final signing of the contract with Iraq takes place, expected next month, Kogas may find a new partner to help develop the 3.3-trillion-cubic-foot gas field, Kogas said in a filing.

The signing of the contract had been delayed twice since KazMunaiGas and Kogas won the right to develop the gas field last year because of disputes with provincial authorities in Anbar province, where the field is located.

In April, Iraqi Prime Minister Nouri al-Maliki visited Seoul and agreed for South Korea to have the priority right to at least 250,000 barrels a day of crude oil during any emergency that upsets the global supply-and-demand balance, equivalent to about 10% of South Korean daily crude imports.

(Source: Wall Street Journal)

We reported last week on the withdrawal of the Kazakhstan-based KazMunaiGas from negotiations on the Akkas gas field in Anbar province.

This week the head of KMG, Askar Balzhanov, shed more light on the background to the company's decision, and it reflects very poorly on the Iraqi authorities:

"One of the reasons for our withdrawal from the Akkas project in Iraq is that the local authority, where the field is located, and the central government of Iraq had different points of view on the project. And this disagreement caused our withdrawal."

While the nature of the internal wrangling has long been known, it is significant that a major international company has chosen to make public the fact that political bickering is costing the country and its people money.

It can be argued that politicians at the parliamentary level have put their differences aside in the national interest in order to form a government, but it is also undeniable that the result is a bloated cabinet that took far longer to put together than anyone thought reasonable.

One economist estimates that nearly $500 billion has been lost over the past eight years in the oil sector alone, due to poor public sector administration standing in the way of progress.

It's clear that Iraq needs more statesmen and fewer politicians.

KazMunaiGas has informed Iraq's Ministry of Oil that is is withdrawing from negotiations on the Akkas gas field in Anbar province.

"Unfortunately, the talks have failed to resolve all issues which emerged at a late stage", the company said in a statement, "and it has not been possible to develop a consensus document that would fully meet the interests of all parties".

Together with the Korea Gas Corporation (KOGAS), they won a tender for development of the field in October of last year, but signing of the contract was delayed twice due to disagreements between provincial officials and the oil ministry over contract terms.

Abdul-Mahdy al-Ameedi, director of the Iraqi oil ministry's contracts and licensing directorate, told Reuters the ministry had already talked with KOGAS over whether it could undertake the development of Akkas alone, but would ask the company officially in the coming days.

"They are thinking about it and need to discuss it internally," said Ameedi.

The company went on to stress that it still believes Iraq to be an attractive area for investment.

(Sources: KazMunaiGas, Reuters)

Following the success of the first Iraq Mega Projects conference last year, which offered access to high level decision-makers of Iraq's Mega Projects, CWC today announced dates for the second conference which takes place in Istanbul, Turkey on 18-20 October 2011.

Major changes happened in 2010 with hundreds of contracts signed allowing work to begin on supporting oil field infrastructure that will eventually see the capacity of oil output reach 4.4 million bpd by 2015.

This year's conference will focus on the progress of those contracts awarded, the challenges faced as well as presenting further projects to be awarded to further the production of the twelve oilfields and the three gas fields Akkas, Mansuriyah and Siba.

Conference Producer Shane White commented "Iraq Mega Projects will bring together operators, ministry representatives, local councils, service providers and other Iraqi experts who together can help develop Iraq as a major oil producer."

The agenda focuses on oil field case study sessions highlighted by the contractors, recent developments of the gas fields, water projects drilling activates, infrastructure growth, and corporate social responsibility. In addition a one day seminar will discuss developing the value chain which will be led by senior Iraqi professionals.

South Korea's Hyundai Heavy Industries has tendered the lowest of six bids for the construction of a 500-megawatt natural-gas fired power plant in Najaf, an Iraqi Electricity Ministry official said.

According to Bloomberg, Hyundai bid $158.9 million for the work; Metka SA (METTK) of Greece, Turkey’s Enka Insaat & Sanayi AS, Lanco Infratech Ltd. (LANCI) of India, and companies from Iraq and Jordan also bid for the project, Deputy Electricity Minister Salam Qazaz said in an interview.

The  plant is to be built within 18 months.

“The winner of the bid will be announced between three days and one week following a study of technical and financial aspects of the tender,” Qazaz said in Baghdad.

In a separate bid, Hyundai Heavy, Lanco Infratech, three Iraqi groups and an Italian company submitted offers to build a 250-megawatt power station in Al-Qaim in western Iraq, Sabih Ishak, a director general at the Electricity Ministry, said in an interview from Baghdad. Results will be announced April 17, he said. The plant will run on gas from the nearby Akkas field, he said.

Iraq’s electricity plants and distribution system have suffered through years of conflict, sanctions and sabotage. Iraqis receive power from the national grid for an average of about one hour in every five. Frequent outages hamper economic reconstruction, and protests over unreliable electricity supplies have made the issue a major concern of the government.

Former Electricity Minister Karim Wahid resigned last June after two people were killed in riots over blackouts and power rationing. Prime Minister Nuri al-Maliki pledged to address the problem after forming his new government in December.

A group of South Korean companies signed contracts on April 7 to build 25 power stations, half of 50 that are planned at a total value of $6.25 billion. Caterpillar Inc. (CAT) and Man SE (MAN) are among companies that have bid for the remaining 25 plants, Electricity Minister Raad Shallal said on March 23.

The government also invited bids in December for the construction of four bigger plants that would raise generating capacity by a combined 2,750 megawatts. Those bids will be for a 1,250-megawatt plant near Basra, and three plants of 500 megawatts each in the cities of Samawa, Diwaniya and Amarah.

(Source: Bloomberg)

The spokesman of the Iraqi Oil Ministry said on Sunday that the ministry is working to complete the preparations for the fourth oil licensing round.

Assem Jihad told AKnews that the fourth round of licences will include the provinces of Najaf, Karbala, Samawa, Diwaniya and Anbar, which were not included in the previous rounds.

"The tour will include the announcement of the exploratory sites and then invie the international companies to develop and rehabilitate the oil fields, and after that a meeting will be held with the companies working in these fields."

"Iraq is seeking through the next rounds to explore more oil fields and develop the country's infrastructure and train the cadres and intesify the oil drilling operations and the formation of exploratory committees."

Iraq has the third largest oil reserves in the world after the Iraqi Oil Ministry announced the increase of oil reserves by 25 per cent to 143.1 billion barrels in October.

Major oil companies signed agreements to extract Iraq's oil reserves and this is planned to boost Iraq's production capacity to 12 million barrels per day from 2.5 million bpd during the next six years.

KOGAS of South Korea and KazMunaiGas of Kazakhstan won a contract to develop the Akkas gas fields in Anbar province in the third licensing round launched by the ministry late last year, but the signing of the deal has been repeatedly delayed.

A group led by "Kuwait Energy Company" (KEC) won the Ceiba[Siba] gas contract in Basra, southern Iraq, while the TPAO, KEC and Kogas company won the license contract of gas field in Mansourieh, which is located near the Iranian border in Diyala province.

45 companies worldwide have competed to win the development of three fields in the third licensing round, after the first and second licensing rounds were limited to developing 10 discovered un exploited oil fields.

The Iraqi Oil Ministry had announced last September that crude oil inventories in the country reached to 505 billion barrels of discovered fields that are 66, with total recoverable reserves of 143 billion barrels.

(Source: AKnews)

The long-awaited signing of the deal to develop Iraq's Akkas gas field in Anbar province has been delayed again.

An Iraqi Oil Ministry spokesman said it was delayed because of disagreements about what the local government gets from the deal, according to Associated Press reports.

An initial agreement to develop the 5.6 trillion cubic foot Akkas gas field in Anbar province was due to have been signed on Thursday in Baghdad.

A consortium led by Korea Gas Corp. (KOGAS) along with Kazakhstan's KazMunaiGas bid in October to develop the field.

But after hours of delays as reporters waited at the Oil Ministry, spokesman Asim Jihad told The Associated Press that the signing was postponed because officials in Anbar province want more control over how the revenue is spent.

Anbar officials protested on the day of the auction, saying they wanted more jobs from the deal.

(Sources: Associated Press, Reuters)

Mitsubishi and Royal Dutch Shell (LSE: RDSA) are in talks with Iraq on a possible project to build a natural gas processing plant, with Mitsubishi planning a floating liquefied natural gas (LNG) plant to export some of the gas, according to the Wall Street Journal.

The remaining natural gas will be used in the domestic market, said Ahmed Al-Shamma, Deputy Minister for Refining and Gas Processing at Iraq's Ministry of Oil, on Wednesday.

The comment follows Iraq's oil ministry's remarks in December, in which the ministry said it was hoping to sign a $12 billion deal with Royal Dutch Shell and Mitsubishi to capture gas being flared from southern oil fields in order to help boost the country's power generation.

Al-Shamma didn't say whether the planned floating LNG plant was part of the $12 billion deal.

A spokesman for Mitsubishi said the company was considering producing and exporting LNG from the project, but didn't give details.

Iraq has proven gas reserves estimated at 112.6 trillion cubic feet, the world's 11th-largest, according to the U.S. Central Intelligence Agency's World Factbook, but the population sufferes from severe shortages of electricity.

Iraq produces 1.7 billion cubic feet of gas a day, of which some 700 million cubic feet is flared off.

In December, the Iraqi government said it had invited international specialized firms to build three gas-fired power plants in southern and western Iraq: the 500-MW Najibiyah plant in Basra governorate, a 500-MW Haydariyah plant in Najaf governorate and the 250-MW Akkas facility in the western Anbar province.

Japan recently announced that it will provide longer-term trade credit insurance to Mitsubishi's natural gas project with Shell.

(Source: Wall Street Journal)

Syria and Iraq have reached a final agreement to build two oil pipelines and a gas pipeline between their two countries, and tender invitations will be issued soon, Syrian Oil Minister Sufian Alao [Suffian Alao] (pictured) was quoted as saying on Tuesday.

Alao was quoted by Syrian newspaper Al-Thawra as saying an existing oil pipeline from Iraq to Syria was being repaired.

Platts reports that the pipeline, linking the northern Iraqi oil region of Kirkuk to the Syrian Mediterranean port of Banias, was shut down in the 1970s when relations deteriorated between the rival Ba'ath parties in power in Damascus and Baghdad.

Iraq reopened the line in 2000 to bypass UN sanctions, shipping some 200,000 bpd of Kirkuk crude to Syria, which used the crude in its own refineries and exported an equal amount of its own oil to markets.

The leaky pipeline, which has a capacity to carry 300,000 b/d of crude oil, has been shut since the US-led invasion of Iraq in March 2003, when the main K3 pumping station along the pipeline was damaged by US air strikes.

Alao did not say when work, which has already been delayed since initial agreement was reached to repair the pipeline in 2007, would be completed.

Iraq has said it plans to build three pipelines through Syria for heavy and light oil as well as natural gas to cope with new export capacity once incremental production comes on line from fields being developed by foreign oil companies under long term service contracts.

The heavy oil pipeline would likely transport heavy crude from the northern Qayara and Najmah oil fields, which were awarded to Angola's Sonangol.

The light crude oil pipeline would carry Kirkuk crude oil to Banias.

Iraq currently exports its Kirkuk blend crude oil to the Turkish port of Ceyhan, which lies to the north of Banias. There are plans to rehabilitate the existing Kirkuk-Ceyhan twin pipeline system, which has a design capacity of 1.6 million bpd, following a deal with Ankara to extend the transit agreement.

A senior Iraqi official said recently that while the Syrian pipeline option had been discussed for years, there was now movement on the issue with Baghdad seeking foreign investors for the projects.

One of the Iraqi gas fields awarded in last year's gas auction, Akkas, lies in the north near the border with Syria. The field, which is slated to produce 400,000 Mcf/d of gas when developed, has been earmarked as a potential source of exports in the future to the European market, possibly through the Arab Gas Pipeline that carries Egyptian Gas through Jordan, Syria and Lebanon and is being extended to the Turkish border.

Alao referred to plans to build a 56-inch pipeline with capacity to transport 110 million cu m/d of natural gas from Iran's South Pars gas field through Iraq and Syria, where it would link up with the Arab Gas Pipeline.

The agreement with Iran was reached during talks January 20 in Damascus last week with Iranian Oil Minister Masoud Mirkazemi. The two sides signed a cooperation agreement allowing Iranian gas exports through Syria and then on to Europe with the proposed pipeline.

Syria has been ramping up its gas production in recent years to meet high domestic demand. Alao said total gas output last year rose to 10.07 Bcm, up from around 9.1 Bcm/year in 2009. Syria produced an average 27.5 million cu m/d last year.

Because Syria cannot produce sufficient gas domestically, it has to rely on imports to meet rising demand for power generation as it phases out reliance on fuel oil. At present Syria is importing around 1.45 Bcm/year from Egypt but is seeking additional supplies.

Alao said that the electricity sector accounted for 87% of total gas usage, taking 6.704 million cu m/d of the 8.9 million cu m/d of clean gas supplied by gas processing plants.

Oil production rose marginally to a total 140.931 million barrels in 2010, an average of 386,000 b/d, a slight increase over 383,000 b/d produced the previous year, he said.

(Source: Platts)