KRG bans gas flaring: minister
The Kurdistan Regional Government (KRG) has ordered oil companies operating in the Kurdistan Region to cease the environmentally harmful practice of gas flaring. “Starting from now, it is illegal to flare a single [cubic] foot,” the Minister of Natural Resources Kamal Atroshi said in an interview with Rudaw’s Sangar Abdulrahman on August 19.
Atroshi also detailed efforts to develop the natural gas sector and reserves of about 25 trillion cubic feet, which will require a lot of investment as much of the gas contains highly toxic hydrogen sulfide that will have to be removed.
The minister was recently in Baghdad where he met his federal counterpart, Minister of Oil Ihsan Abdul-Jabbar, and described the trip as an “important success." The two ministers decided the federal government will provide a million litres of good quality petrol per day, at a set price that is reasonable for consumers, part of a government effort to control prices, improve quality, and root out corruption at the gas pump. Baghdad will also supply kerosene for household heating this winter.
The following is a translation of the interview.
Last week you met with Ihsan Abdul-Jabbar, Iraq’s minister of oil, and afterwards you said that the meeting was positive. Can you tell us what you agreed on?
Kamal Atroshi: This was my first meeting since I got into the position. Previously both the president and the prime minister of the Kurdistan Region had on several occasions said that the relationship with the federal government is essential and needs to be elevated, and this relationship must be in action and based on respect, and set the ground for clear strategies between the Kurdistan Region and the federal government in Baghdad. On this basis, I saw it as important to start a new page of history with the Iraqi ministry of oil, because I am the minister of natural resources and we have a partnership with the ministry of oil.
We had a three day visit to Baghdad. I had not been to Baghdad in nearly 40 years and it was a special visit for me to go to a city I have been away from for 40 years. Anyway, it was a really important success. I see that the federal Minister of Oil Ihsan Abdul-Jabbar is a skilled and experienced person and we could form a good relationship.
We agreed on three things. First, we decided that this year, all of Kurdistan’s need for kerosene will be provided from Baghdad. The reason I brought up this situation is because we have villagers in the Kurdistan Region that have kids and their lives are there and winters there are extremely cold. It is impossible for me to accept that they remain without oil. So this year for the winter, heating fuel will reach every house of Kurdistan. It will start in October in all places of the Region.
The second thing is that last night in a phone call between the Iraqi minister of oil and I, we agreed that a million liters of Iraqi car fuel will reach Kurdistan Region everyday starting the 23rd of this month. We agreed that the price will be 650 dinars per liter, of really good quality. Kurdistan Region’s need for fuels is around 4.5 to 5 million liters per day. Right now what is stable is around a million liters from KAR Company, a million liters will come from Iraq. That’s two million. Yesterday I spoke to another refinery in Kurdistan and they promised to add another 750,000 liters to the market and that will give us around 70 percent of the required amount. This does not mean that we will stop there. There could be other strategies that provide a better and more stable flow to a point that we can adapt to it and there will not be another crisis. This will take six months to a year. Previously, much of our fuel came from other countries and some of it was of a bad quality, which had a very negative effect on cars. That is a huge economic disadvantage that cannot be tolerated.
The system we have now set up is that this petroleum is going to be distributed to petrol stations under our ministry’s supervision so that there is no corruption in it, and all stations get the amount based on the size of their tanks in a fair way without any difference. This will be for all stations regardless of where they are.
Previously, there were many complaints about the price of petroleum at the petrol stations, and they in return blamed the ministry of natural resources, saying you set the price and quality of petrol. Do you have anything to do with the current price of petrol in the Kurdistan Region?
We met with KAR Company, which is the main source of petrol, and agreed to set up a new system that would make a liter of petrol 660 dinars with an octane of 92 or 93, which is a good amount. The quality of that petrol and that price is fair. The financial ability of the people of Kurdistan is suitable for such a price regardless of what they work. Petrol is one of the products of oil, and what is oil for. It is not for eating. It is for the refineries. Everywhere in the world, oil is sent to refineries, then it is refined, and some of it goes to petrochemicals. We have not reached that level yet, but petrochemicals is of great importance to the government and the prime minister has given it serious care to bring Kurdistan’s hydrocarbons to a level that its revenue will be a stable source of income for this nation’s future.
Speaking of the future of this nation, the Kurdistan Region’s policy for selling oil and their strategy, will it continue this way. Recently there was a threat that the federal government wanted full control of the Region’s oil. What is the Kurdistan Region’s plan? Will they continue with the same policy of selling oil?
The process of producing oil from the reservoirs to the production is the same everywhere. It is important when you come to the level of production, after the foundation, which is done by the companies. The companies, if they do not find oil, then there’s nothing. But when they find it, we set the budget for it depending on the properties of the oil that the company informs us of. When I came, I saw that the oil and gas fields, most of them are in the production stage… There are fields that have been producing for around ten years and they have produced the majority of the oil in the reservoirs. What is left might not be much, but my plan is to make use of the remaining small amount for an extra few years.
Other fields that are new and their reservoirs are good, if we do not control the production process, foreign companies are here for business, what they want to do is take out the most oil, refine it and sell it in the fastest possible time, and get their share. We will be the only ones who are disadvantaged from this because we live here. Therefore, we need a scientific and fair and ethical policy, because we are the owners of the oil.
Since I came into office, a complete study has been done on the process of all the companies and a new policy has been set for all the companies. There is close auditing of the companies’ spending every month. We can now know how much this company spends this year and compare it to the previous year and the coming year. These are all oil procedures and they are not short term. Economic calculation in the oil and gas sector is a very important process. This is not a tomato paste factory to know what comes in and what goes out so easily. This is oil and gas. Controlling it is a very complicated process. I am very satisfied that since day one, we have worked with all the oil and gas companies that are in the Kurdistan Region, met each of them and set up new plans for them and new goals. The health of the reservoirs is very important. I can literally squeeze the field completely in two years, but I can also make it ten or fifteen years. This is an administrative, technical, and ethical matter. We did this with all the companies.
You have seen all the previous oil deals of the Kurdistan Region. How satisfied are you with the older deals?
Those deals have been made ten or fifteen years ago under different circumstances. When I came here, most of those deals are classic deals, they are called production sharing contracts. There are no problems with it because in many third world countries these companies come and start production with a little amount of money and give the government a share. Those contracts are classic and do not need anything. What is needed is to have control. Are you able to watch over those contracts in a way that your share is not lost, your spare capacity and your reservoir health is clear to you, and you have someone in the ministry that knows what the companies are doing and what will happen to the process in five years? For this you need experience. Unfortunately, we do not have such experience.
Even now, in your ministry, there are foreign advisors and staff. When will the day come where the Kurdistan Region will reach the level that it can rely on locals for its oil industry?
That is one of my biggest goals and, as long as I live, it will remain - to have Kurds control the oil and gas industry of Kurdistan. Unfortunately after 15 years, we have nothing. There are no specific directorates for any of the processes. I have started this. The new policy is special. We have put fresh graduates into the process with foreign experts. I have brought three experts that the process would not work without. One is the head of the projects and contracts, and they all have at least 35 years of experience. The second one watches over the process completely in the Kurdistan Region, including cost and effects, whether on environment or other effects. The third one is a production expert. They know all the details of a barrel of oil and the reservoirs. These three work with locals every day. My budget in the ministry is very low and I cannot send them to big companies for practice like is done everywhere else.
Most of the Kurdistan Region’s revenue comes from you so how come you don’t have money?
This money all goes to the Ministry of Finance. What we do is we take out the oil and take it to Ceyhan port. The money all goes to the Ministry of Finance. It is like that everywhere. Do not ever think for example the Iraqi Ministry of Oil has a billion dollars. All the money goes to the finance ministry. I have no idea and nothing to do with how the ministry distributes this. My job is that, if I have a budget for my ministry and the youth working for us, within a year and a half we will reach a point where I can easily say Kurdistan’s oil is in safe hands. The foreigners stay a year or six months. Maybe tomorrow they come and say that they want to leave. That will be a problem. I need to have a transitional period so Kurdistan can make its own experts so we are certain that the oil industry is seeing progress.
You talked about the oil fields in the Kurdistan Region. What fields can be relied on for the revenues?
As I said, we have many fields at different maturity levels. Some have most of its oil produced and we have others that are new, but have many challenges. We have the Sheikhan field, which is one of our best fields both in terms of reserves and the quality of its oil is decent. It’s a complicated reservoir and needs close care and expertise in order to work properly, and we work in cooperation with the company that works on it. We have a few other fields. Atrush is really good. The fields of Kurdamir near Sulaimani are good. This is oil. We also have the Khurmala fields in Kirkuk. The Kirkuk one has three fields, one is oil, the others are water and gas. Khurmala field is under our control. It is good but needs technical and close care to keep it going. That needs expertise and I am also keeping close watch. KAR Company is in charge of production there, and we work together to do the job right.
Production at Tawke and TaqTaq fields, how much have they dropped? Do they have good capacity or are they not meeting your expectations?
Unfortunately Taq Taq is not. When it started it was one of the best fields of Kurdistan and had great reserves. Production started and reached around 160,000 barrels. The process of controlling the production and reserves was not done well and in around seven years, it dropped and now it is very little. It produces around 6,000 barrels now. I’m not hopeless. I met with the experts and set up a plan to check if there is anything left to produce, but this also needs a special process, not the one that was done 10 to 15 years ago. So I’m not saying we have lost hope in Taq Taq field, but it needs a lot of special work and technology.
Tawke is a huge field, but has a complicated reservoir that has been damaged… It needs experts to deal with it to have proper production. I want to reach a level where I can say the complexity is close to the level of experience in the ministry, which is hard to do. It should have been done 15 years ago. Tawke, just like everywhere else, started with little product, a few wells, and this was increased, and pumping was increased and so did product, until it reached its peak production. Now it has been declining. What we have done is that we have brought gas and are increasing pressure with gas to give life to the dying reservoir. So far, we have hope that this will have good results based on our studies. We have reached a belief that we can increase production by 10,000 barrels for a year to extend its life.
Have you done any new contracts for new fields in the Kurdistan Region?
The last contract that I have signed was the Kurdamir contract in Sulaimani. Apart from that we have not done anything. That was either in January or February. The contract is a classic contract which is a production sharing contract. That field needs expertise. So far we do not know how much oil it has. It will need more wells to know the properties. I believe that in the future it will have a good effect on the oil economy of Kurdistan. Apart from that, I have not done any contracts, but I look at how many other blocks there are in the Kurdistan Region and I do not want to give it to just anyone like before. I will give it to those who have the capability to control the production, especially heavy oil that cannot be produced by everyone. I look at the technical, financial capabilities, and the expertise to sign more deals.
How big are the gas reserves of the Kurdistan Region? When will you export it?
I can say that free natural gas is at around 25 trillion cubic feet. Our main priority and that of the prime minister as we work together, and he cares a lot about gas production, but he wants it in a developed way. I am very glad to work with him. He has helped a lot, and has gained great experience in the past two years of the ninth cabinet as he led the ministry for a while. This pleases me as he understands the strategies very quickly and decides in the right way. Under his supervision, we are at the level of studying the companies, whether it is one company or a consortium.
So what is our problem with Kurdistan Region’s gas? What Kurdistan produces now, which is around 420 billion cubic feet at Khormor plant, that is a really good gas which is the best for electricity and does not need much refining, as God has done it. It is now a fast track process and production.
The other fields have not been developed, such as Chamchamal, Miran, Bina Bawi, and Kurdamir, which might have gas. In the first three, the reserves are a lot. I will not tell you how much, but it is a lot. The type of the gas unfortunately is not that sweet and has a high hydrogen sulfide level, which is poisonous. The company that comes to work in these fields needs to have really good experience because a small mistake in the process could cause a disaster for the environment and people’s lives. No one can even get close to it for even a minute. For that reason, we are looking at what companies or consortiums have the expertise to do so.
The second thing is that it costs a lot. It needs at least 4-5 billion dollars to start production in that field and sweeten the gas, which costs a lot. That needs a lot of investment, and once you sweeten it, that sulfur becomes a mountain of yellow sulfur, which is also dangerous. That company needs to have the ability to either make use of that sulfur or take it somewhere else. It is very challenging and that is where we are.
Recently there were a lot of complaints about the fact that all this oil is produced and all the gas just goes into the air without making any use of it and it harms the environment. What have you done about that?
From the first day of production of oil in the Kurdistan Region, all this gas has been flared. Most of this has hydrogen sulfide, which is poisonous and could kill people. This has been going on since day one. Based on international standards, that is a crime. No company, regardless of who they are, who burns that gas here cannot do a quarter cubic foot of that in their own countries, whether in the UK, France, US, or China, because it is not allowed. In this period, the flaring was there and had a lot of negative effects on nature. That flaring, if it is cloudy, mixes the gas with the clouds and causes acid rain and falls on people and the ground and animals, which is very dangerous.
Two weeks ago I decided that all companies in the Kurdistan Region should not flare a single foot at all. More than 150 million [cubic] feet was flared every day for the past 15 years. I have given 18 months as a period to solve this problem. Starting from now, it is illegal to flare a single [cubic] foot and cause complications for the ecosystem. I have set 18 months to figure out what to do with the gas. We are not burning it. We cannot use it to make food because it is poisonous. So we decided that we would put it back underground, 4 to 5 thousand meters into the reservoirs. The usefulness of this is that you put it back into its place and it increases our oil production as it pressures the water under the oil, and reduces cost. We have set 18 months, and the punishment is taxes if the companies want to flare. They either abide by this or they go and burn it in their own homes, for which they will be imprisoned. A cubic centimeter of that gas being flared is illegal everywhere.
This was harmful and I was really upset about it. The companies tried to get out of stopping it with sweet words because it would cost them money. That gas is not theirs, it is mine, and the company says that since it is not mine I will burn it. Therefore for the next 18 months no gas of Kurdistan shall be flared.
Secondly, 10 to 15 thousand barrels of oil were being burned in the testing process. Do you know how much that is? Multiply it by 70 dollars. That is money, that is our economy. We have banned that too. Not a single drop of oil should be burned in the testing process. We are protecting our environment and it brings a great revenue. Now you will not see it, but in the coming years you will see that the lives of the reservoirs have been extended.
Atroshi also detailed efforts to develop the natural gas sector and reserves of about 25 trillion cubic feet, which will require a lot of investment as much of the gas contains highly toxic hydrogen sulfide that will have to be removed.
The minister was recently in Baghdad where he met his federal counterpart, Minister of Oil Ihsan Abdul-Jabbar, and described the trip as an “important success." The two ministers decided the federal government will provide a million litres of good quality petrol per day, at a set price that is reasonable for consumers, part of a government effort to control prices, improve quality, and root out corruption at the gas pump. Baghdad will also supply kerosene for household heating this winter.
The following is a translation of the interview.
Last week you met with Ihsan Abdul-Jabbar, Iraq’s minister of oil, and afterwards you said that the meeting was positive. Can you tell us what you agreed on?
Kamal Atroshi: This was my first meeting since I got into the position. Previously both the president and the prime minister of the Kurdistan Region had on several occasions said that the relationship with the federal government is essential and needs to be elevated, and this relationship must be in action and based on respect, and set the ground for clear strategies between the Kurdistan Region and the federal government in Baghdad. On this basis, I saw it as important to start a new page of history with the Iraqi ministry of oil, because I am the minister of natural resources and we have a partnership with the ministry of oil.
We had a three day visit to Baghdad. I had not been to Baghdad in nearly 40 years and it was a special visit for me to go to a city I have been away from for 40 years. Anyway, it was a really important success. I see that the federal Minister of Oil Ihsan Abdul-Jabbar is a skilled and experienced person and we could form a good relationship.
We agreed on three things. First, we decided that this year, all of Kurdistan’s need for kerosene will be provided from Baghdad. The reason I brought up this situation is because we have villagers in the Kurdistan Region that have kids and their lives are there and winters there are extremely cold. It is impossible for me to accept that they remain without oil. So this year for the winter, heating fuel will reach every house of Kurdistan. It will start in October in all places of the Region.
The second thing is that last night in a phone call between the Iraqi minister of oil and I, we agreed that a million liters of Iraqi car fuel will reach Kurdistan Region everyday starting the 23rd of this month. We agreed that the price will be 650 dinars per liter, of really good quality. Kurdistan Region’s need for fuels is around 4.5 to 5 million liters per day. Right now what is stable is around a million liters from KAR Company, a million liters will come from Iraq. That’s two million. Yesterday I spoke to another refinery in Kurdistan and they promised to add another 750,000 liters to the market and that will give us around 70 percent of the required amount. This does not mean that we will stop there. There could be other strategies that provide a better and more stable flow to a point that we can adapt to it and there will not be another crisis. This will take six months to a year. Previously, much of our fuel came from other countries and some of it was of a bad quality, which had a very negative effect on cars. That is a huge economic disadvantage that cannot be tolerated.
The system we have now set up is that this petroleum is going to be distributed to petrol stations under our ministry’s supervision so that there is no corruption in it, and all stations get the amount based on the size of their tanks in a fair way without any difference. This will be for all stations regardless of where they are.
Previously, there were many complaints about the price of petroleum at the petrol stations, and they in return blamed the ministry of natural resources, saying you set the price and quality of petrol. Do you have anything to do with the current price of petrol in the Kurdistan Region?
We met with KAR Company, which is the main source of petrol, and agreed to set up a new system that would make a liter of petrol 660 dinars with an octane of 92 or 93, which is a good amount. The quality of that petrol and that price is fair. The financial ability of the people of Kurdistan is suitable for such a price regardless of what they work. Petrol is one of the products of oil, and what is oil for. It is not for eating. It is for the refineries. Everywhere in the world, oil is sent to refineries, then it is refined, and some of it goes to petrochemicals. We have not reached that level yet, but petrochemicals is of great importance to the government and the prime minister has given it serious care to bring Kurdistan’s hydrocarbons to a level that its revenue will be a stable source of income for this nation’s future.
Speaking of the future of this nation, the Kurdistan Region’s policy for selling oil and their strategy, will it continue this way. Recently there was a threat that the federal government wanted full control of the Region’s oil. What is the Kurdistan Region’s plan? Will they continue with the same policy of selling oil?
The process of producing oil from the reservoirs to the production is the same everywhere. It is important when you come to the level of production, after the foundation, which is done by the companies. The companies, if they do not find oil, then there’s nothing. But when they find it, we set the budget for it depending on the properties of the oil that the company informs us of. When I came, I saw that the oil and gas fields, most of them are in the production stage… There are fields that have been producing for around ten years and they have produced the majority of the oil in the reservoirs. What is left might not be much, but my plan is to make use of the remaining small amount for an extra few years.
Other fields that are new and their reservoirs are good, if we do not control the production process, foreign companies are here for business, what they want to do is take out the most oil, refine it and sell it in the fastest possible time, and get their share. We will be the only ones who are disadvantaged from this because we live here. Therefore, we need a scientific and fair and ethical policy, because we are the owners of the oil.
Since I came into office, a complete study has been done on the process of all the companies and a new policy has been set for all the companies. There is close auditing of the companies’ spending every month. We can now know how much this company spends this year and compare it to the previous year and the coming year. These are all oil procedures and they are not short term. Economic calculation in the oil and gas sector is a very important process. This is not a tomato paste factory to know what comes in and what goes out so easily. This is oil and gas. Controlling it is a very complicated process. I am very satisfied that since day one, we have worked with all the oil and gas companies that are in the Kurdistan Region, met each of them and set up new plans for them and new goals. The health of the reservoirs is very important. I can literally squeeze the field completely in two years, but I can also make it ten or fifteen years. This is an administrative, technical, and ethical matter. We did this with all the companies.
You have seen all the previous oil deals of the Kurdistan Region. How satisfied are you with the older deals?
Those deals have been made ten or fifteen years ago under different circumstances. When I came here, most of those deals are classic deals, they are called production sharing contracts. There are no problems with it because in many third world countries these companies come and start production with a little amount of money and give the government a share. Those contracts are classic and do not need anything. What is needed is to have control. Are you able to watch over those contracts in a way that your share is not lost, your spare capacity and your reservoir health is clear to you, and you have someone in the ministry that knows what the companies are doing and what will happen to the process in five years? For this you need experience. Unfortunately, we do not have such experience.
Even now, in your ministry, there are foreign advisors and staff. When will the day come where the Kurdistan Region will reach the level that it can rely on locals for its oil industry?
That is one of my biggest goals and, as long as I live, it will remain - to have Kurds control the oil and gas industry of Kurdistan. Unfortunately after 15 years, we have nothing. There are no specific directorates for any of the processes. I have started this. The new policy is special. We have put fresh graduates into the process with foreign experts. I have brought three experts that the process would not work without. One is the head of the projects and contracts, and they all have at least 35 years of experience. The second one watches over the process completely in the Kurdistan Region, including cost and effects, whether on environment or other effects. The third one is a production expert. They know all the details of a barrel of oil and the reservoirs. These three work with locals every day. My budget in the ministry is very low and I cannot send them to big companies for practice like is done everywhere else.
Most of the Kurdistan Region’s revenue comes from you so how come you don’t have money?
This money all goes to the Ministry of Finance. What we do is we take out the oil and take it to Ceyhan port. The money all goes to the Ministry of Finance. It is like that everywhere. Do not ever think for example the Iraqi Ministry of Oil has a billion dollars. All the money goes to the finance ministry. I have no idea and nothing to do with how the ministry distributes this. My job is that, if I have a budget for my ministry and the youth working for us, within a year and a half we will reach a point where I can easily say Kurdistan’s oil is in safe hands. The foreigners stay a year or six months. Maybe tomorrow they come and say that they want to leave. That will be a problem. I need to have a transitional period so Kurdistan can make its own experts so we are certain that the oil industry is seeing progress.
You talked about the oil fields in the Kurdistan Region. What fields can be relied on for the revenues?
As I said, we have many fields at different maturity levels. Some have most of its oil produced and we have others that are new, but have many challenges. We have the Sheikhan field, which is one of our best fields both in terms of reserves and the quality of its oil is decent. It’s a complicated reservoir and needs close care and expertise in order to work properly, and we work in cooperation with the company that works on it. We have a few other fields. Atrush is really good. The fields of Kurdamir near Sulaimani are good. This is oil. We also have the Khurmala fields in Kirkuk. The Kirkuk one has three fields, one is oil, the others are water and gas. Khurmala field is under our control. It is good but needs technical and close care to keep it going. That needs expertise and I am also keeping close watch. KAR Company is in charge of production there, and we work together to do the job right.
Production at Tawke and TaqTaq fields, how much have they dropped? Do they have good capacity or are they not meeting your expectations?
Unfortunately Taq Taq is not. When it started it was one of the best fields of Kurdistan and had great reserves. Production started and reached around 160,000 barrels. The process of controlling the production and reserves was not done well and in around seven years, it dropped and now it is very little. It produces around 6,000 barrels now. I’m not hopeless. I met with the experts and set up a plan to check if there is anything left to produce, but this also needs a special process, not the one that was done 10 to 15 years ago. So I’m not saying we have lost hope in Taq Taq field, but it needs a lot of special work and technology.
Tawke is a huge field, but has a complicated reservoir that has been damaged… It needs experts to deal with it to have proper production. I want to reach a level where I can say the complexity is close to the level of experience in the ministry, which is hard to do. It should have been done 15 years ago. Tawke, just like everywhere else, started with little product, a few wells, and this was increased, and pumping was increased and so did product, until it reached its peak production. Now it has been declining. What we have done is that we have brought gas and are increasing pressure with gas to give life to the dying reservoir. So far, we have hope that this will have good results based on our studies. We have reached a belief that we can increase production by 10,000 barrels for a year to extend its life.
Have you done any new contracts for new fields in the Kurdistan Region?
The last contract that I have signed was the Kurdamir contract in Sulaimani. Apart from that we have not done anything. That was either in January or February. The contract is a classic contract which is a production sharing contract. That field needs expertise. So far we do not know how much oil it has. It will need more wells to know the properties. I believe that in the future it will have a good effect on the oil economy of Kurdistan. Apart from that, I have not done any contracts, but I look at how many other blocks there are in the Kurdistan Region and I do not want to give it to just anyone like before. I will give it to those who have the capability to control the production, especially heavy oil that cannot be produced by everyone. I look at the technical, financial capabilities, and the expertise to sign more deals.
How big are the gas reserves of the Kurdistan Region? When will you export it?
I can say that free natural gas is at around 25 trillion cubic feet. Our main priority and that of the prime minister as we work together, and he cares a lot about gas production, but he wants it in a developed way. I am very glad to work with him. He has helped a lot, and has gained great experience in the past two years of the ninth cabinet as he led the ministry for a while. This pleases me as he understands the strategies very quickly and decides in the right way. Under his supervision, we are at the level of studying the companies, whether it is one company or a consortium.
So what is our problem with Kurdistan Region’s gas? What Kurdistan produces now, which is around 420 billion cubic feet at Khormor plant, that is a really good gas which is the best for electricity and does not need much refining, as God has done it. It is now a fast track process and production.
The other fields have not been developed, such as Chamchamal, Miran, Bina Bawi, and Kurdamir, which might have gas. In the first three, the reserves are a lot. I will not tell you how much, but it is a lot. The type of the gas unfortunately is not that sweet and has a high hydrogen sulfide level, which is poisonous. The company that comes to work in these fields needs to have really good experience because a small mistake in the process could cause a disaster for the environment and people’s lives. No one can even get close to it for even a minute. For that reason, we are looking at what companies or consortiums have the expertise to do so.
The second thing is that it costs a lot. It needs at least 4-5 billion dollars to start production in that field and sweeten the gas, which costs a lot. That needs a lot of investment, and once you sweeten it, that sulfur becomes a mountain of yellow sulfur, which is also dangerous. That company needs to have the ability to either make use of that sulfur or take it somewhere else. It is very challenging and that is where we are.
Recently there were a lot of complaints about the fact that all this oil is produced and all the gas just goes into the air without making any use of it and it harms the environment. What have you done about that?
From the first day of production of oil in the Kurdistan Region, all this gas has been flared. Most of this has hydrogen sulfide, which is poisonous and could kill people. This has been going on since day one. Based on international standards, that is a crime. No company, regardless of who they are, who burns that gas here cannot do a quarter cubic foot of that in their own countries, whether in the UK, France, US, or China, because it is not allowed. In this period, the flaring was there and had a lot of negative effects on nature. That flaring, if it is cloudy, mixes the gas with the clouds and causes acid rain and falls on people and the ground and animals, which is very dangerous.
Two weeks ago I decided that all companies in the Kurdistan Region should not flare a single foot at all. More than 150 million [cubic] feet was flared every day for the past 15 years. I have given 18 months as a period to solve this problem. Starting from now, it is illegal to flare a single [cubic] foot and cause complications for the ecosystem. I have set 18 months to figure out what to do with the gas. We are not burning it. We cannot use it to make food because it is poisonous. So we decided that we would put it back underground, 4 to 5 thousand meters into the reservoirs. The usefulness of this is that you put it back into its place and it increases our oil production as it pressures the water under the oil, and reduces cost. We have set 18 months, and the punishment is taxes if the companies want to flare. They either abide by this or they go and burn it in their own homes, for which they will be imprisoned. A cubic centimeter of that gas being flared is illegal everywhere.
This was harmful and I was really upset about it. The companies tried to get out of stopping it with sweet words because it would cost them money. That gas is not theirs, it is mine, and the company says that since it is not mine I will burn it. Therefore for the next 18 months no gas of Kurdistan shall be flared.
Secondly, 10 to 15 thousand barrels of oil were being burned in the testing process. Do you know how much that is? Multiply it by 70 dollars. That is money, that is our economy. We have banned that too. Not a single drop of oil should be burned in the testing process. We are protecting our environment and it brings a great revenue. Now you will not see it, but in the coming years you will see that the lives of the reservoirs have been extended.