Iraq Signs Final Akkas Gas Deal with KOGAS

Source: Reuters 10/13/2011, Location: Middle East

Iraq's oil ministry said it had signed a final deal with Korea Gas Corp. (KOGAS) to develop its Akkas gas field in the western province of Anbar, the country's largest with reserves of 5.6 trillion cubic feet. Iraq had asked KOGAS to develop the field on its own after partner KazMunaiGas Exploration Production withdrew from the deal.

"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. OPEC member Iraq has already signed scores of contracts with foreign companies to develop its oil industry as it seeks to rebuild after years of war and economic sanctions.

The signing of the Akkas deal was delayed for months by a dispute between the Iraqi government and provincial officials in Anbar, a Sunni heartland and former al Qaeda stronghold, which included the issue of possible gas exports to Syria.

While the oil ministry said this dispute had been resolved, the signing was postponed for a second time in February when officials again disagreed over contract terms. 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, holder of the world's 10th-largest gas reserves, 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. More than eight years after the U.S.-led invasion, Iraq's national grid supplies only a few hours of power each day, shortages that could be satisfied through utilizing untapped gas reserves in the oil rich country.


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