LNG

Iraq’s power sector remains vulnerable to fluctuations in Iranian gas supplies, prompting Baghdad to press ahead with plans to import LNG through the country’s first floating terminal, developed by Excelerate Energy.

Excelerate Energy has agreed to deploy Iraq’s first floating LNG import terminal at the port of Khor Al-Zubair, offering regas services for a minimum contracted offtake of 250 million cubic feet per day. Project investment totals $450 million, inclusive the cost of the FSRU and jetty modifications.

The Iraqi government plans to seal an agreement with Excelerate Energy to import US LNG via a floating storage and regas unit. The FSRU could supply up to 500 MMcf/d, potentially replacing about half of the gas previously sourced from Iran.

Excelerate has received an award letter from the Iraqi government to develop a floating LNG import terminal. Capital expenditure is sought not to exceed $300 million, officials close to the project indicated.

Iraq is nearing completion on its first ever LNG purchase agreement, as the country struggles to meet growing electricity demand amid recurring power outages. Excelerate Energy is one of the leading bidders in a competitive tender and currently in advanced talks with Iraq’s state-run South Gas Company.

Construction for ‘ArtawiGas25’ – a first processing unit to recover associated gas from the Ratawi field in southern Iraq – has been started by TotalEnergies together with Basra Oil Company and QatarEnergies. Built at a cost of US$250 million, the facility will be expanded to eventually gather and process enough gas to fuel 1.5 GW of power gen capacity.

The project is part of set up to maximise the use of Iraq’s hydrocarbon resources by setting an end to the wasteful practice of flaring natural gas that comes as a by-product of extracting crude oil in Iraq’s southern Basra region.

Ratawi is a heavy oil field, situated onshore, which recovered just over 10.43% of its total recoverable reserves as of today. Peak production is expected in 2029. At current production rates, Ratawi currently accounts for approximately 2% of the Iraq’s daily oil output – as well as an unspecified amount of associated gas which will now be gathered and processed for use as fuel for generating electricity.

Gathering gas from three oil fields

The Gas Growth Integrated Project (GGIP), launched in September 2021, is a US$10 billion project designed to enhance the development of Iraq’s natural resources and improve the country’s electricity supply. Phase-1 of the gas processing plant is designed to recover 300 Mcf/d by eventually recovering gas being flared at three oil fields – enough to supply gas to 1.5 GW of power generation capacity.

TotalEnergies is the operator of the field and owns a 45% stake in the ArtawiGas25 processing unit, under construction for a total cost of US$250 million, while Basra Oil Company has a 30% stake and QatarEnergy owns the remaining 25%. The Qatari oil and LNG major is understood to be interested in replicating gaining know-how about gas processing and may well replicate lessons-learnt elsewhere in the Middle East.

Quest to replicate project across Iraq

The modular design of ArtawiGas25 could also pave the way for potential replication across other Iraqi oil fields. According to TotalEnergies, ArtawiGas25 will create up to 160 direct and indirect jobs for Iraqi nationals during construction phase and 30 jobs during operation phase.

The launch the ArtawiGas25 project gives the Iraqi people a “tangible insight into the benefits of the GGIP, which will provide more energy with less emissions,” said Julien Pouget, senior VP Middle East & North Africa, at Total Exploration & Production.

Through this project, the French oil major seeks to demonstrate its capacity to deliver valuable and fast-track solutions in accordance with the Iraqi government’s energy strategy and the country’s electricity needs. To that end, much of the processed gas has been sold forward to electric power producers in the Basra region while construction of a 1 GW solar park is due to commence in the coming weeks.