Iraq strikes Basra gas deal with America’s Honeywell
ERBIL, Kurdistan Region – Iraq’s ministry of oil signed an agreement on Wednesday with US energy giant Honeywell to increase gas production at five oilfields in Basra to 600 million cubic feet.
Thamir al-Ghadhban, Iraq’s oil minister, signed the agreement in Baghdad alongside the new US ambassador to Iraq, Mathew Tueller. Iraq’s state-owned company South Gas will work in partnership with Honeywell at Basra’s al-Artawi facilities.
“The Iraqi government and Ministry of Oil are very keen on investing in gas in order to increase the annual budget of the country and increase the production of Iraqi natural resources, and to also reduce air pollution by not burning the gas anymore,” Ghadhban told a press conference.
“Today the Iraqi oil ministry signed an agreement to increase Iraqi gas production in order to also benefit the electricity sector and for the internal and external use by exporting the gas for the regional countries and that will increase Iraqi’s annual budget,” he added.
Iraq’s Ministry of Oil announced its intention to capture gas flares for electricity generation back in February 2019. Doing so could help improve Iraq’s ramshackle power grid, which suffers daily blackouts, and clean up the environment.
Iraqi officials had said they aim to end gas flares in Iraq by 2021.
Also speaking at Wednesday’s press conference, US Ambassador Tueller hailed the deal.
“We are very happy and delighted to see steps are being taken by the Iraqi oil ministry regarding reinvesting in gas which was one of the main reasons behind air pollution in Iraq and, instead of wasting the gas, now the Iraqi oil ministry is investing in it to increase the annual budget of Iraq and also electricity production,” Tueller said.
“American gas companies including the Honeywell company are committed to serve the Iraqi state in order to increase the annual budget of Iraq, electricity production, and gas production, which the gas of the al-Artawi project is mainly focusing on, also those kind of projects will improve the environment and reduce air pollution in Iraq as well as provide job opportunity to hundreds or thousands of Iraqis,” he added.
Hayan Abdul Zahra, general manager of South Gas, said although the project is based in Basra, the whole country stands to benefit.
Aassim Jihad, an oil ministry spokesman, said: “The project comes when the ministry of oil started to reduce the burring of gas at the oil fields, in order to get benefits from the gas especially using it to produce electricity.”
“The first phase … will last for 36 months, and the oilfields in which the project will start to operate in are Majnun, Gharib al-Qurna, al-lhiss, al-Tubba, and al-Siba.”
The Iran-Iraq war (1980-88) saw Iranian jets strike Iraqi oil fields and infrastructure, setting the industry back years. Moreover, the embargo imposed on Iraq due to its invasion of Kuwait deprived it of critical technology to develop its oil fields.
Iraq has suffered from severe power shortages since the 1990s. The shortages became even more severe by 2003 with aging power generation plants and terrorist attacks.
Last summer, electricity shortages were a primary reason for protests spreading across Iraq. Especially in southern Basra, people took to the streets to demonstrate against poor services, lack of employment, and the meagre hours of state-provided electricity.
The Iraqi government has made agreements with foreign firms including Siemens and General Electric in order to improve the electricity supply in Iraq, especially after Washington re-imposed sanctions on Iran, which exports energy to Iraq.
Initially, the US granted Iraq a 45-day waiver to import electricity from Iran after Washington re-imposed sanctions on Tehran in November last year. That waiver was renewed three times in December, March, and June, each time for 90 days.
Iran supplies about a third of Iraq’s energy, exporting 28 million cubic feet of gas to feed its power stations or the direct import of up to 1,300 megawatts of Iranian-produced electricity.