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Sinopec wins contract to develop Iraq's Mansuriyah gas field

Highlights

Mansuriyah reserves estimated at 4.5 Tcf

Contract previously held by TPAO-led consortium

Iraq under pressure to reduce reliance on Iranian imports

Dubai — Iraq has awarded Chinese state-owned Sinopec a contract to develop the 4.5 Tcf Mansuriyah gas field in the eastern province of Diyala, the Iraqi oil ministry said April 20, as OPEC's second largest oil producer seeks to lower its reliance on Iranian energy imports.

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The ministry did not disclose any details about the contract. Sinopec could not be reached for comment.

Since the 2018 reimposition of sanctions on Iran, the US has granted Iraq waivers to continue importing Iranian gas and electricity, which is needed to avert power outages that have led to deadly protests in the past. But, under increased pressure to wean itself off Iranian imports, Iraq has been seeking to boost non-associated gas production and import electricity from neighboring countries other than Iran.

Iraq has plans to import electricity from Saudi Arabia, Turkey and Jordan, and the grid of the six-member Gulf Cooperation Council, and is also mulling developing solar power projects to help plug power shortages.

Total agreement

The Sinopec award comes on the heels of an agreement between Iraq and Total to jointly work on developing four associated gas and solar power projects.

In the associated gas agreement announced March 29, Total will establish a central gas complex in Ratawi with the aim of collecting and refining associated gas produced from the Ratawi, West Qurna 2, Majnoun, Tuba and Lahis oil fields.

The agreement involves the construction of complexes and units to treat associated gas, which will be in two phases with a capacity of 600 MMcf/d, according to the oil ministry.

Currently, most of Iraq's gas output is associated gas produced at oil fields, and the majority of this is flared. Iraq was the world's second worst country for gas flaring after Russia in 2019, according to the World Bank.

Canceled Contract

Iraq announced last October that it was planning to launch a licensing round for the Mansuriyah gas field, located in Diyala province near the border with Iran, after it can celled a contract with a group of companies led by Turkey's state-owned TPAO.

Under their initial development plan for the field, commercial production had been due to begin in 2015 and reach 80 MMcf/d that year, but their plans were scuppered by the June 2014 offensive by the militant group Islamic State.

IS never took control of the field but held nearby territory from which they conducted attacks on it. Security improved with IS being driven from the area by mid-2017 and the TPAO-led consortium had been negotiating terms to return before the contract was can celled.

For Sinopec, the contract will help boost overseas natural gas production overseas. Currently the state-owned oil giant's gas portfolio is mainly focused in its home market.

It produced 1.07 Tcf of natural gas in 2020, up 2.3% year on year. The company is targeting increasing the volume to 1.2 Tcf in this year, according to its 2020 annual report.