Frustrated at the failure to secure developers for gas fields at the Baghdad energy auction, two Iraqi provinces are jostling for greater influence in awarding contracts to foreign firms.
Rows over land and authority between Iraq’s semi-autonomous northern Kurdish region and the central government have already delayed vital energy laws and added controversy to plans to award major global firms development contracts.
Iraq says it needs foreign expertise to rehabilitate and develop its oil and gas fields after years of war.
The demands of western Anbar province and northeastern Diyala province, home to two major gas fields, now add another layer of complexity to the already largely uncharted process of auctioning off rights to develop Iraq’s energy reserves.
”The Oil Ministry wants to be the only one to make deals with foreign firms. We have no objection, but we must be partners in making these deals as long as they involve Anbar,” Anbar governor Qassim al-Fahdawi told Reuters.
To ensure the province’s cooperation in awarding foreign firms contracts to develop its Akkas gas field, there must be also be deals for the gas to be used in Anbar in related industries, Fahdawi said.
Anbar, like the rest of Iraq, is plagued by unemployment, and it wants gas to be used locally to make products like fertilizer for export.
”The premiership and the Oil Ministry understand this plan that we have put forward, and a committee has been formed from the Oil Ministry, the Cabinet and the Anbar government to choose the firms that would sign such deals,” Fahdawi said.
The Iraqi government has promoted Akkas as a source of gas for an export pipeline, either to Syria or via the planned Nabucco pipeline To Turkey and Europe.
But there was just one bid for Akkas, with gas reserves of 2,1-trillion cubic feet, in the Oil Ministry’s June 30 energy auction, and the bidding consortium led by Italy’s Edison did not in the end accept Iraq’s stiff payment terms.
There were no bids at all for the Mansuriyah gas field in Diyala, with 3,3-trillion cubic feet of reserves, in the auction, which was heavily criticised for producing just one deal from eight fields on offer.
Long wait
Anbar now appears ready to accept the ministry’s plan to let the National Oil Company (NOC) take the lead on Akkas.
But the NOC must be formally set up by hydrocarbon laws whose passage has been held up in Parliament because of a protracted row between Iraq’s Kurdish Regional Government and Baghdad’s Shi’ite Arab-led government.
”The Oil Ministry invites provincial council members and governors to attend negotiations with foreign firms … They’re free to listen, give opinions or suggestions but not to take part in negotiations,” ministry spokesperson Asim Jihad said.
”Only ministry experts can be involved in the talks.”
Diyala and Anbar may have to wait a long time to tap their energy riches.
”We cannot stand by passively on this issue, we need to work towards a solution, because this situation will create a crisis,” Diyala governor Abdul Nasser al-Mehdawi told Reuters.
Mehdawi said Diyala may seek to win the right to negotiate with foreign firms independently, or act as a broker by bringing firms to the government for it to undertake dealmaking.
”The important thing is that the project is realised, not who realises it … We cannot wait much longer.” — Reuters