Iraqi Prime Minister Mohammed Shia al-Sudani was present at the signing of six oil and gas contracts in a ceremony held at the Ministry of Oil in Baghdad on Tuesday - the first step towards Iraq’s ultimate goal of energy independence and self-sufficiency.
Sudani described the signing of the licences as the “optimal investment of oil wealth, and Iraq's entry into the global gas market.”
Iraq is notorious for the deadly and toxic practice of gas flaring. It is second only to Russia in terms of the amount of gas burned off, though the Iraqi population lives on average much closer to flaring sites than do Russians. The World Bank estimates that Iraq flares around 17 billion cubic metres of gas per year, worth around $8 billion annually. The practice also causes severe environmental damage and is a risk to the health of people living close to flaring sites, from Basra to the Kurdistan Region, where refugee camps are particularly vulnerable.
A BBC investigation last year proved that there is a direct link between gas flaring and the large number of people suffering from cancer.
“It is unacceptable to continue the mismanagement of burning gas, which wastes wealth and affects the environment,” Sudani said.
The Iraqi government is driving an ambitious programme of reform in the oil and gas sector and intends to announce a new round of licensing - its sixth - which is expected to focus on gas.
Iraq “will reach self-sufficiency in gas within three years to cover all our market demands,” Sudani said.
Reducing reliance on imports from Iran
Many believe, with good reason, that Iran has been the main beneficiary of Iraq’s failure to invest in its infrastructure. Around 43% of Iraq’s electricity production depends on imports of Iranian gas and electricity and is a major source of revenue for Tehran, bringing in billions of dollars.
While the US has issued more than 18 sanction waivers for Iraq to buy Iranian gas, the Americans made it clear during the recent visit of an Iraqi delegation to Washington, led by deputy prime minister Fuad Hussein, that they want to see the practical and tangible steps Iraq is going to take to reduce its dependency on Iranian gas.
The licenses signed this week are regarded as one practical step. If this step is followed by similar actions, such as finalising an agreement with the French company TotalEnergies, this will boost gas production in Artawi field from 60,000 barrels per day to 200,000. Such a move would be proof that Iraq is serious, it is on the right path to self-sufficiency and is reducing its reliance on imported gas for electricity generation.
The new Iraqi government is keen to show that it is taking measures to reform the oil sector, to present Iraq as a major power player in the world energy sector and use that power to increase its status on the world stage. Sudani is pressing on with a new agenda and vision. “The gas sector is priority number one, we need to be a major player as a gas country alongside being a major oil country,” he said.
The Ministry of Oil is under instruction to start the sixth round of licensing, to reduce gas flaring in Iraq, and to encourage calls for international oil companies to invest in the country’s oil and gas fields. The government says Iraq is on the path of recovery and ready to put the problems of the past behind it.
Mariam Atta is a Baghdad-based writer covering Iraqi and Arab affairs.
