Saudi Arabia has expressed interest in investing in a gas hub at Ratawi in southern Iraq, former Iraqi electricity minister Luay al-Khatteeb told Argus.
US engineering firms Honeywell and Bechtel signed an initial agreement in July last year to build the gas hub. But Bechtel has since exited the project as a result of differences over the joint-venture leadership, al-Khatteeb said.
“Honeywell is working with some other partners to revive the negotiation of the gas hub. But other competitors are interested in developing the gas hub at Ratawi including the consortium of General Electric, [Iraq-owned engineering firm] Uruk, Acwa Power and possibly [Saudi] Aramco,” al-Khatteeb said.
The project’s first phase will process up to 300mn ft³/d of associated gas from the Majnoon, West Qurna 2, Luhais, Tuba and Subba oil fields in the Basrah and Dhi Qar provinces.
Iraq’s finance minister and acting oil minister Ali Abdul-Amir Allawi concluded a visit to Saudi Arabia on 23 May, during which he held meetings with Saudi oil minister Abdulaziz bin Salman and Saudi Arabia’s ministers of finance, foreign affairs and trade. The discussions focused on encouraging Saudi companies to invest in Iraq and play a role in the country’s reconstruction. It is part of a series of official visits to countries in the region to enhance economic co-operation, the Iraqi finance ministry said.
Iraq is also under pressure from the US to diversify its gas and electricity supply and reduce its heavy dependence on Iranian imports. Earlier this month, the US extended a sanctions waiver until 23 September enabling Iraq to continue importing Iranian gas and electricity. Since March, the US has been reassessing whether to extend the sanctions waiver on a monthly basis, pending the formation of a new government in Iraq.
Iraq imports around 1.2 GW/d of electricity and 40mn ft³/d of gas as a feedstock from Iran during the peak supply period, al-Khatteeb said. Iraq’s three-year plan to become self-sufficient in power generation stalled when the government was reduced to caretaker capacity in October, and protests that have plagued Iraq since then have also threatened investment interest, he said.
Iraq has a number of agreements in place to rebuild its power sector, including deals with Siemens, General Electric and other European and Chinese companies, a power line from Jordan, and a power inter-connectivity project with the Gulf Co-operation Council Interconnection Authority (GCCIA). A number of these projects have stalled or will take time to complete.
“I kept telling [Washington] that the three parameters that matter to us in terms of gas and power supply is firstly the best price, secondly sufficient volumes, and three fastest possible delivery. I kept repeating to them we needed 3-4 years of full executive authority, the right financial situation, right market conditions and zero interference,” al-Khatteeb said.
Baghdad is looking to the semi-autonomous Kurdistan region’s gas supply as an in-country solution for power generation.