Will Iraq nevertheless begin to use its natural fuel reserves?

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The fact that Iraq continues to rely on sanctioned neighbor Iran for around 40% of its electrical power supply, much of it from fuel imports, has long been a point of great contention with the United States. Array Even though each and every year when, whoever the prime minister of Iraq is at the time who goes to Washington to ask for money, he promises that this story about Iran will soon be over, he never does. The solution, however, is simple: Iraq stops burning all the fuel it releases in the process of extracting oil from its wells and uses this “related” fuel for its electric power generation. If there is enough of it, which it can be, given the country’s massive oil drilling, then whatever is left after supplying Iraq day and night can be exported and generate much-needed profits for the country. The hands-on strategy last week saw the Iraqi Oil Ministry approve the increase in related fuel production at the Zubair oil field to 147 million consistent popular cubic feet per day (mmscf). “The new allocation is aimed at increasing the number of compressors at the Hammar Mishref station to 11 [which] will increase [from] the compressor capacity of 35 million cubic feet per day to 147 million cubic feet per day . day. day,” said South Gas Company CEO Hamza Abdel-Baqi.

If this endeavor continues, it would be a smart start to a broader deployment of capturing related fuel and using it for purposes to gain advantage in Iraq, rather than simply burning it through burning oil wells. Unbeknownst to many, and hardly unexpected given Iraq’s dismal fuel burning record, Baghdad has signed on to the World Bank and United Nations “Zero Routine Flaring” initiative, with the goal of ending the burning regime. of fuel produced by oil drilling until 2030. At that time, Iraq was burning the most fuel at the moment in the world (after Russia): about 17. 37 billion cubic meters. As of this year, Iraq remains the worst performing country in this regard after Russia, though the amount of related fuel burned has dropped to around 16 billion cubic meters. That amount, however, can still support around 3 million homes day and night, year after year. This would go a long way to alleviate the ordinary paradox that Iraq suffers from continual blackouts despite having the world’s fifth-largest crude oil reserves (at least 145 billion barrels) and the world’s twelfth-largest fuel reserves ( almost 131 trillion cubic feet).

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There have been announcements similar to those made last week several times in the past. A notable example in 2020 when Iraq’s Oil Ministry announced that it had signed an agreement with Baker Hughes to capture the related fuel in the potentially massive Gharraf and Nasiriyah fields in Dhi. According to the commentary at the time through the director of the Iraqi state oil company Dhi Qar, Anwar Hadi Shiaa, the initiative aimed to increase the fuel production of the sites from 20 mmscf to 200 mmscf in the first phase of development. This same announcement was made in October of this year. Moreover, it is precisely the same agreement with Baker Hughes that the Department of Petroleum also announced in 2018. Soon after, those same agreements were announced around the same time in the two years, the then Iraqi prime minister went to Washington to ask for money.

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Synergies may then develop with the only major fuel allocation that has made significant progress in Iraq over the years, the Basra Gas Company (BGC) allocation, orchestrated through the British oil giant and Shell fuels, which has 44% in venture capital. The BGC was designed in particular to enable Iraq to build its independence from power and achieve economic diversification through the capture of freshly burned fuel from the Rumaila, West Qurna 1 and Zubair fields in the first phase. By 2019/20, the BGC had reached a peak production rate of 1,035 mmscf/d, the highest in Iraq’s history, and enough fuel to generate about 3. 5 gigawatts of electricity. The BGC is also guilty of recently supplying around 70% of Iraq’s liquefied petroleum fuel (LPG) and improving Iraq’s export capabilities, which has helped the country become a net exporter of LPG. 2017. In June this year, BGC exported its first shipment of semi-refrigerated liquefied petroleum fuel, from BGC’s Umm Qasr jetty. as a component of plans to spice up the country’s LPG exports.

Shell’s efforts at BGC were to be the cornerstone in building Iraq’s value-added petrochemical sector, in particular, for starters, the Nebras petrochemical plant assignment that began in earnest in 2013. The plans for the designs Nebras’ originals – formulated between Shell and Iraq’s Ministry of Petroleum and Ministry of Industry and Minerals – were for a task that could produce at least 1. 8 million metric tons per year (mtpy) of petrochemicals. This would make it the first major Iraqi petrochemical assignment since the early 1990s and one of 4 major petrochemical complexes in the entire country, the others being Khor al-Zubair in the south, Musayeb near Baghdad and the refinery complex from Baiji to the north. Shell’s titanic efforts to push HDG volumes to over a billion cubic feet per day mean that ethane can be extracted sustainably and reliably, offering enough volume to make a giant petrochemical plant viable. Ethane will be the initial feedstock for the first Iraqi plants, similar to how it was in Saudi Arabia’s master fuel formula development that captured related fuel, which was then fractionated and supplied as the main draco without firing consistent with the flagship market town of Jubail. .

By Simon Watkins for Oilprice. com

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