Iraq inaugurates gas processing project in latest efforts to reach energy self-sufficiency

The new Crude Processing Facility 3 oil station in the Halfaya oilfield in southern of Maysan province, Halfaya. Reuters

Iraqi Prime Minister Mohammed Shia Al Sudani inaugurated on Saturday the Gas Processing Project at an oilfield in Halfaya, a major stride in the country’s efforts to stop flaring natural gas and reach energy self-sufficiency.

The project will process 300 million standard cubic feet per day of associated natural gas, a by-product of oil production that is normally flared in Iraq due to a lack of infrastructure and investment, a government statement said.

The field is located in the southern Maysan province, about 300 kilometres south of Baghdad, and is being developed by China’s PetroChina-led consortium. It has estimated reserves of 4.1 billion barrels of oil and produces about 350,000 barrels per day, according to Iraqi Oil Ministry figures.

Mr Al Sudani described the project as a “landmark and is part of our continuing efforts to maximise the benefits of our oil and gas resources,” according to the statement.

“It represents a significant step on the path of our economic reform and optimal investment strategies to stop gas flaring and its impact in the environment and health,” he added.

The project contains two units, each processes 150m scfpd, and will produce dry gas to feed the power plants in Maysan province, generating more than 1,200 megawatts, as well as an initial quantity of 1,100 tonnes of liquefied gas, with a target to reach 2,200 tonnes.

It will also produce 20,000 barrels per day of gas condensates, a low-density mixture of hydrocarbon liquids that Iraq blends with crude oil to improve its quality, as well as sulphur as a by-product, the statement added.

Gas imports

Despite being Opec’s second-biggest producer, Iraq is dependent on Iran for about a third of its electricity needs.

It buys electricity and natural gas to generate power from its neighbour but still has electricity shortfalls that result in extended power cuts across the country.

Baghdad has been under pressure from the US to wean itself off Iranian energy imports, which have been subject to US sanctions since 2018.

Since then, Washington has repeatedly extended waivers to Baghdad for periods of 45 to 120 days to be able to import Iranian electricity and gas.

Iraq has taken some measures to develop its natural gas resources and reduce the shortfalls in the electricity sector in recent years. Iraq’s natural gas reserves stand at about 3,714 billion cubic metres, according to Oil Ministry figures.

In April it signed a deal with Ukraine’s Ukrzemresurs company to develop Akkas gasfield in the western part of the country.

The company will increase production, from 60m scfpd at present to 100m cfpd within two years, Iraqi Oil Minister Hayan Abdel Ghani said. That will increase to 400m scfpd within four years, he added.

Last year it signed a deal with French company TotalEnergies to develop oil and gas and renewable energy projects worth $27 billion.

Iraq holds a 30 per cent stake in the joint venture, while 45 per cent is held by TotalEnergies and the remaining 25 per cent by QatarEnergy.

The Gas Growth Integrated Project will recover flared gas at three oilfields to supply gas to power generation plants.

It will build a seawater treatment plant for providing water injection for pressure maintenance, as an alternative to the use of fresh water from rivers and aquifers.

It will also develop a one-gigawatt solar power plant to supply electricity to the Basra regional grid.

Mr Al Sundani said his country's gas production increased from 2,972m scfpd in 2022 to 3,100m scfpd currently. No more than 1,800m scfpd of that gas are utilised, he added.