Will Iraq phase out gas flares and exploit the lost energy potential? |
In the oil fields of southern Iraq, billions of cubic feet of gas literally go up in smoke, burned on flares for lack of infrastructure to capture and treat it.
Flares produce large amounts of carbon dioxide and other greenhouse gases, contributing to global warming without any economic or social benefit.
Analysts say the waste is particularly glaring because Iraq is a major importer of natural gas, meeting a third of its needs with expensive and not always reliable supplies from neighboring Iran.
The government has pledged to phase out the practice by 2030, but the road to a greener, less wasteful energy sector is proving long.
For the oil companies exploiting the mega fields around Basra, it is actually cheaper to flare the associated gas than to capture, process and market it, despite the obvious environmental costs.
Currently, only half of the three million cubic feet of gas that comes out of Iraqi oil wells every day is captured and processed.
The rest is burned in flares creating plumes of acrid black smoke that smear the sky.
“The flared gas, if captured and processed, could provide electricity to three million homes,” said Yesar al-Maleki, Gulf analyst at the Middle East Economic Survey.
“It could certainly help the country end its severe electricity shortages that amount to a supply-demand gap of nine gigawatts in the summer.”
– ‘In smoke’ –
In December, Iraqi Oil Minister Ihsan Ismail pledged to reduce flare gas by 90% by 2024.
But despite contracts with foreign oil majors, including France’s TotalEnergies, the target risks running into bureaucratic obstacles in a sector that provides 90% of state revenue.
Over the past two years, the government has reduced flare gas by just five percent.
The captured gas is the fuel Iraq desperately needs for its power plants.
Under an exemption from US sanctions on Iran, Iraq imports 750 million cubic feet a day of gas from its eastern neighbor.
Any disruption in this supply can lead to widespread power outages, particularly in the summer when the demand for air conditioning and refrigeration peaks.
Maleki said that failure to resolve the issue has multiple costs for Iraq.
“He loses financially by burning money in the air; he loses more money by importing gas from neighboring countries at a high price; he loses more money by solving the resulting problems in his sector of electricity when it replaces its gas turbines with expensive and polluting liquid fuels and loses forever to the environment.”
Basra province is home to Iraq’s five largest oil fields and accounts for 65% of its flared gas, according to World Bank figures.
The Basrah Gas Company, a consortium of Iraq’s state-owned South Gas Company, Shell and Mitsubishi, captures one billion cubic feet of gas from the three fields in which it operates.
It plans to increase that figure to 1.4 billion cubic feet by the end of 2023, but that requires heavy investment, both in processing and capture.
Chief executive Malcolm Mayes said the consortium was investing around $1.5 billion in a giant new treatment facility in Artawi, outside Basra.
“At Artawi, we are building two processing trains,” Mayes said.
“The first will be commissioned in May 2023 and the second in November 2023 and by then we will have the capacity to handle 1.4 billion cubic feet, or almost 90% of our rental area.
– ‘Cleaner electricity’ –
Iraq has also signed a mega-contract with TotalEnergies which includes the construction of a facility to process the associated gas from three oil fields in the south.
“The launch of the plant is scheduled for 2026,” said the French firm.
Iraq says the plant will process 300 million cubic feet per day of gas that is currently flared, rising to 600 million in a second phase.
TotalEnergies teams are already on the ground to conduct preliminary studies, but the process is dragging on.
Last month, Baghdad said some clauses in the contract “require time and cannot be implemented or resolved in a short period of time”.
A similar project awarded to Chinese companies in the neighboring province of Maysan is only half finished.
In the meantime, the people of Basra continue to live with the environmental consequences.
“Everything is polluted by these flares, the water, the animals, they are all dead,” said Salem, an 18-year-old shepherd from the village of Nahr Bin Omar, site of a major oil field just north of Basra.