Corruption and Iranian influence are hampering Baghdad's large-scale energy projects

Iraqi gas has the potential to change the world energy map

Campo petrolífero de Nahr Bin Umar, al norte de Basora, Irak - REUTERS/ESSAM AL-SUDANI
Nahr Bin Umar oil field, north of Basra, Iraq (REUTERS/ESSAM AL-SUDANI)

Iraq's huge oil reserves have helped it overcome financial difficulties and contribute to the stability of the global energy market, but corruption and Iran's political influence in Baghdad have hindered progress on development projects announced by successive governments. So far they have made little progress. 

  1. International encirclement
  2. Basra Gas Company Project
  3. Quadrilater project 
  4. The Nasiriyah plan

Iraq has large gas reserves, but has so far failed to use them properly, leading to major problems for the country and world energy markets.

Despite its abundant oil and gas reserves, Iraq suffers from often catastrophic budget crises. Iraqi oil minister Hayyan Abdul-Ghani said several major projects recently awarded to foreign companies would boost Iraq's gas production to about 3 billion cubic metres per day, or about 517,000 barrels of oil equivalent per day. 

AFP/AHMAD AL-RUBAYE - Policías iraquíes hacen guardia en el campo petrolífero de Halfaya, perteneciente a la empresa PetroChina, en el distrito de al-Kahla, en la ciudad de Amara, al sur de Bagdad, el 26 de julio de 2022
Iraqi policemen stand guard at the Halfaya oil field, belonging to the PetroChina company, in the al-Kahla district of the city of Amara, south of Baghdad, July 26, 2022 (AFP/AHMAD AL-RUBAYE)

International encirclement

Tehran maintains a tight grip on Baghdad through political, economic and military proxies. Imports from Iran have been a major source of friction between Iraq and the US for years, preventing many investments in the country.

Despite setbacks in the development of the natural gas sector, Iraq's untapped reserves have important global implications. Based on the idea of using previously built gas, these and other efforts do not describe Iraq's revenues. Former Iraqi Prime Minister Mustafa al-Kadhimi called on Washington to support the economy to import gas and electricity in Iran by May 2020. 

PHOTO/WIKIPEDIA/Fuerza Aérea de EE. UU. por el Sargento Primero, Michael E. Best, vía Wikimedia Commons - Un helicóptero MD-530F de Blackwater Security Company ayuda a proteger el sitio de la explosión de un coche bomba en Bagdad, Irak el 4 de diciembre de 2004, durante la Operación LIBERTAD IRAQUÍ
A Blackwater Security Company MD-530F helicopter helps protect the site of a car bomb explosion in Baghdad, Iraq on 4 December 2004, during Operation IRAQI FREEDOM (PHOTO/WIKIPEDIA/Fuerza Aérea de EE. UU. por el Sargento Primero, Michael E. Best, vía Wikimedia Commons)

Basra Gas Company Project

The Basra Gas Company project is the only major gas project in Iraq that has made significant progress over the years. The most unique element of Iraq's capabilities to develop the natural gas sector is the country's potential to become a global player. Iraq's proven natural gas reserves are about 131 trillion cubic metres, and may be larger because it has not kept pace with gas exploration.

PHOTO/REUTERS/LAZLO BALOGH - Terminal de gas natural
Natural gas terminal (PHOTO/REUTERS/LAZLO BALOGH)

Moreover, the additional gas reserves that could be associated with further oil development could be very large. Even by the most conservative estimates, Iraq produced only 15-20% of its ultimate recoverable oil reserves when it joined the Zero Forever Burn programme in 2017, compared with 23% for the Middle East as a whole. 

For Iraq, these figures have not changed much since then. Additional exploration could significantly increase the number of proven reserves in the coming decades, especially given Iraq's high drilling success rate. 

PHOTO/ARCHIVO - Instalación petrolera
Oil installation (PHOTO/ARCHIVO)

Quadrilater project 

One of these major gas projects is part of the 27 billion dollar Quadrilater project between France's Total Energy and the Iraqi government, which was agreed in 2021 but was significantly delayed due to Iraq's attempts to violate the terms of the agreement. 

The first part of the deal includes an initial investment of approximately 10 billion dollars earmarked for integrated gas development projects. The main aim is to extract gas from the oil field and, instead of flaring it as before, it will be exported to meet domestic energy demand, and then used to raise funds for the state.

REUTERS/STEPHANE MAHE - Un cartel con el logotipo de la compañía francesa de petróleo y gas TotalEnergies aparece en una gasolinera en Bouguenais, cerca de Nantes, Francia, 14 de noviembre de 2022
A sign with the logo of French oil and gas company TotalEnergies appears at a gas station in Bouguenais, near Nantes, France, 14 November 2022 (REUTERS/STEPHANE MAHE)

The 27 billion dollar deal appears shaky because the other three elements of the four-nation agreement are dependent on the changing Iraqi government. The same applies to other major gas deals announced by Iraq, which have been announced several times before. 

Almost simultaneously, in 2017, Iraq committed to join the UN and World Bank's Persistent Zero Flaring Initiative, which aims to end conventional flaring of gas produced during oil exploration by 2030, and the oil ministry announced that it had signed the Garraf and Nasiriyah oilfield gas production deal with US engineering giant Baker Hughes. At the time, Iraq was the world's second largest gas producer after Russia, with around 17.37 billion cubic metres. 

Construcción de una planta petrolífera (PHOTO/PIXABAY)
Construction of an oil plant (PHOTO/PIXABAY)

The Nasiriyah plan

These plans were reformulated several times. The first phase of the Nasiriyah plan includes advanced modular gas processing solutions deployed at the Nasiriyah Integrated Natural Gas Complex to pressurise dry gas to produce more than 100 million standard cubic metres of gas. The second phase involves the expansion of the Nasiriyah plant into a full LNG facility capable of recovering 200 million cubic metres of dry gas, LNG and condensate per day. 

Planta petrolífera (PHOTO/PIXABAY)

All of this production will be channelled to the local power sector, as Baker Hughes claims that processing the flue gas from these two fields could provide 400 megawatts of power to the Iraqi grid. Reserves are likely to increase with continued exploration over the coming decades, especially given the high success rate of exploratory drilling in Iraq. If Baker Hughes had been given the green light to proceed with the project, it would have taken about 30 months to complete.