Save for later Print Download Share LinkedIn Twitter After a year of political turmoil, Iraq has a new government and a new oil minister, Hayan Abd al-Ghani, and foreign investors are awaiting the green light to launch potentially transformative energy projects. TotalEnergies is confident that its Ratawi megaproject, agreed in September 2021, can now move ahead quickly. Abd al-Ghani knows it well, having previously headed the South Gas Co. (SGC) and the Basrah Oil Co. (BOC), the French major’s two local partners in the project. Iraq also desperately needs to capture more flared gas, which is a key component of it. Other projects await final approval too, like Sinopec's Mansuriyah gas development, also awarded last year. There’s even talk of a gas bid round. But investors still must navigate a difficult operating environment that could yet nix their plans. Iraq’s vast potential is not in doubt. Indeed, the oil ministry will soon publish a new and independently certified audit of the country’s oil and gas reserves based on 300 prospects and leads identified by the state-run Oil Exploration Co. (OEC), which could raise existing estimates by 70%, says Mohammed Mazeel, the ministry’s head of reservoirs and field development. Iraq’s gas resources remain in focus. There is thought to be another 20 trillion cubic feet around the 4.5 Tcf Akkas field, Mazeel tells Energy Intelligence. The ministry — which is actively encouraging investors to develop Akkas — is open to discussing any proposals. “[There is] less risk in Iraq in exploration … than in other countries. Yes, we have our bureaucracy, rules and regulations that are difficult. But that can be [negotiated],” he insists.A top priority for Iraq’s oil ministry is to eliminate its flaring problem and plug the gas supply deficit. The new minister has already stressed the need for progress on projects being carried out by foreign firms like Shell and China National Petroleum Corp. (CNPC), which together aim to capture around 1.5 billion cubic feet per day of associated gas in the next few years. Total’s gas development sits at the heart of that plan, Abd al-Ghani acknowledges. Part of a multi-layered $10 billion energy project, it aims to capture 600 million cubic feet per day from six oil fields in Basrah. SGC chief Hamza Abd al-Baqi says he hopes work will begin within two months of completing negotiations with Total. However, significant outstanding issues must be resolved in these talks, notably the foreign partners Total wants to bring into the project and the Iraqi government’s proposed — and non-contributing — 40% stake. That could be a stumbling block, says a source close to the project. It will be a crucial test of the minister’s ability to reach agreements with international oil companies (IOCs) — in this case one that is far more important to Iraq than to Total. If agreed, the four components of the project — the oil field development, the gas capture, the water injection and the solar plant — will be implemented concurrently. “It is a kind of precondition for the Iraqis, because they need the water to sustain the [oil] production … for the whole area, they need to stop the flaring, they need to increase the power supply to the country. So they need some deliverables quite quickly,” says the source.IOC interest in Iraq’s oil sector is a shadow of what it once was, with the US majors particularly conspicuous by their absence. The ministry remains hopeful that others will continue to invest, among them Lukoil. While the Russian company is not specifically targeted by sanctions, Western restrictions on trade and finance with Russia could make it more difficult for Lukoil to access the capital needed for projects like the development of its 430,000 barrels per day West Qurna-2 field. Lukoil does not currently see it as a priority and says the terms must be renegotiated given the low profitability of the project. It agreed to a remuneration fee of just 85¢ per barrel after-tax — the lowest of all Iraq's foreign operators. Infrastructure constraints are another obstacle — and Lukoil is yet to build the Tuba-Fao pipeline that would help resolve the problem. Abd al-Ghani has acknowledged the need to increase Iraq’s export capacity by accelerating projects to install pipelines, storage and pumping stations. The West Qurna-2 expansion also remains on the agenda. But Lukoil has failed to get a development plan approved for its giant Eridu discovery in Block 10, which could see production reach 250,000 b/d by 2027-28. In a further sign of investor discontent, Inpex CEO Takayuki Ueda last week described it as a "headache project," saying the Japanese firm would consider divesting its 40% stake if progress was too slow.