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US Orion To Develop Gas Field In Iraq

The Iraqi Oil Ministry has picked an American oil company, Orion, to produce gas from an oil field in the southern part of the country. The field, Nahr Bin Omar, is developed by state company Basra Oil and has an average daily production of 40,000 bpd and 25 million cubic meters of natural gas.

Gas production growth is a priority for Baghdad, as the country is suffering electricity shortages because of insufficient feedstock for power plants. Currently, about 35 million people in Iraq are affected by problems with the electricity sector.

Besides Orion, the Iraqi Energy Ministry is also negotiating with Exxon and several Chinese oil companies on the development of the Nahr Bin Omar field.

Last Thursday, Iraq signed an agreement with BP for the development of oil fields around Kirkuk, according to an unnamed Iraqi official who spoke to Reuters. The government first approached the supermajor last October, after its army retook control of Kirkuk from Kurdistan after an ill-fated independence referendum.

Though control of the city of Kirkuk has been disputed over the last few years because it doesn’t lie within the boundaries of the Kurdistan autonomous region, control over the fields was effectively in Kurdish hands to the chagrin of Baghdad. After the referendum from last September, the Iraqi government saw a chance to regain control of its northern oil wealth, so it took it.

BP was present in northern Iraq until 2015, providing technical assistance in the development of the huge Kirkuk field. But after that, the Kurdish minority took over the field and adjacent deposits. Now, BP plans to boost production from these fields to 750,000 bpd.

Iraq has been the biggest laggard among OPEC members in terms of sticking to its production quota. In November 2016 it pledged to cut 210,000 bpd from its daily production, bringing the total down to 4.35 million bpd. But so far, the target has proved elusive for the embattled country, which is OPEC’s second-largest producer.

Northern Iraq’s fields are among the biggest and most productive, with BP itself estimating the remaining crude oil reserves in the region at 9 billion barrels.

By Irina Slav for Oilprice.com

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