"The China Petroleum & Chemical Corp. (Sinopec) last week signed a 25-year deal with Iraq’s Ministry of Oil that gives it a 49 per cent stake in the Mansuriya non-associated natural gas site.
The contract, which may be extended for an additional five years, follows Sinopec’s signing of a long-term purchase and sales agreement with Qatar Petroleum’s for 2 million tonnes per annum (mtpa) of liquefied natural gas (LNG) for a term of 10 years.
... the U.S. State Department has been looking to re-establish a more constructive association with Iraq since relations soured months after the fall of former Iraq President, Saddam Hussein, in 2003, and the later rise of ISIS.
A key element of these efforts has been to decrease the longstanding role of Iran in Iraq’s political, military, and economic spheres.
The more immediate focus of Washington has been to reduce Iraq’s dependence on Iran for supplies of gas and electricity that are essential to the running of Iraq’s power grid.
The idea has been to grant Iraq waivers to continue to import these products whilst concomitantly attempting to provide it with other options to source them.
Most notably these options have included projects that will enable Iraq both to increase its output of non-associated gas from its own fields and to reduce the flaring of its associated gas to oil fields.
From the U.S. perspective, which has made a massive investment in terms of ‘blood and treasure’ in Iraq since the invasion of 2003, such projects should be done ideally by Washington’s allies or by U.S. companies.
In empirical terms, there is absolutely no reason why Iraq cannot produce enough gas to sustain its own power needs, without Iran’s help, and even to become a significant exporter of gas within a relatively short time.
Official estimates are that Iraq’s proven reserves of conventional natural gas amount to at least 3.5 trillion cubic metres (tcm), or about 1.5 per cent of the world total, placing Iraq 13th among global reserve-holders, with around three-quarters of this figure comprising associated gas that is found in the same reservoirs as oil.
The International Energy Agency, though, estimates that ultimately recoverable resources will be considerably larger, at 8.0 tcm, of which around 30 per cent is thought to be in the form of non-associated gas.
Despite these huge potential gas resources, Iraq has made little substantial progress over the years on developing this potential either for associated or non-associated gas,
although a heads-of-agreement deal with French oil and gas giant, Total, to jointly work on four major projects that include developing the associated gas sector may begin to change this, if it goes ahead.
The Iraq deal with Total is exactly the sort of deal that the U.S. wants to see in Iraq.
Total’s withdrawal from the high-profile South Pars Phase 11 gas development in Iran, despite having already spent over US$1 billion on it, highlighted France’s willingness to comply with Washington’s wishes after then-President Donald Trump pulled the U.S. unilaterally out of the ‘nuclear deal’ with Iran in May 2018.
“On the eve of the signing of the next wave of financing for SP11, the U.S. Treasury Department telephoned senior bankers at the bank that was organising the money and told them that if the financing went ahead
then the U.S. would instigate a full historic investigation of all of the bank’s dealings since 1979 to every country that had been blacklisted by the U.S.,
and it told the French government the same thing,” a senior source who works closely with Iran’s Petroleum Ministry told OilPrice.com at the time.
“The U.S. Treasury also said that all French companies would not win any major contracts with U.S. companies whilst Total stayed in Iran,
but if Total withdrew then the U.S. would make similar projects available to it to compensate,” he added.
Given this, some may conclude that the Total deal in Iraq is one such compensatory deal.
Possibly the very last country that the U.S. wanted to see further increasing its footprint in Iraq is China.
... “[Since Xi Jinping took power in 2012/13] The leadership of China has stressed the virtues of ‘self-reliance’
and has sought to develop relationships with global partners to make up for the ending of the ‘constructive engagement’ with the U.S. and its allies of the past four decades,”
Jonathan Fenby, chairman of the China research team at TS Lombard, in London, exclusively told OilPrice.com.
“This political-economic nexus is set to bring growing divergence from the U.S. as part of the wider agenda of the ‘national strengthening’ being pursued by Xi Jinping,
and Beijing is shifting from being an economic adversary to the U.S. to a geopolitical alternative
and this could result in a step change in the nature of the confrontation between the two countries.”
... China (and) ... Russia (are) operating in a closely co-ordinated manner across key strategic areas, including their activities in the Middle East.
... Extremely close to the Iranian border, and just north of Baghdad, the Mansuriya gas field has an estimated 4.5-4.6 trillion cubic feet (Tcf) of gas in place,
with plans to increase production to at least 320 million standard cubic feet (Mmscf) per day.
This is a valuable deposit in and of itself once gas prices have fully recovered, with a previous contract remuneration of around US$7 per barrel of oil equivalent, but its significance for Russia is much greater than money and comes in two parts.
The first part was that Iraq had previously always sought to offer three particular gas fields together as one development package – Mansuriya, Akkas, and Siba.
These three sites form a skewed triangle across southern Iraq, stretching from Mansuriya near the eastern border with Iran, down to Siba in the south (extremely close to the key Iraqi Basra export hub), and then all the way west across to Akkas (extremely close to the border with Syria).
The second part was highlighted with the signing in September 2019 of a preliminary contract between Russia’s Stroytransgaz and Iraq’s Oil Ministry to develop the hitherto virtually unknown Block 17 in Iraq’s lawless wasteland Anbar province,
a place so violent and unpredictable that it was even avoided where possible by Islamic State. ... "
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Sunday, May 2, 2021
"China Snubs U.S. With Huge Iraqi Gas Deal"
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