<article><p><i>Adds detail on gas projects</i></p><p class="lead">Iraq expects to base its 2021 budget on an oil price of $42/bl, oil minister Ihsan Ismael said at today's Iraq Oil and Gas Show in Baghdad.</p><p>The council of ministers has yet to send the draft budget to parliament. But the price assumption is already more conservative than the $56/bl used for the <a href="https://direct.argusmedia.com/newsandanalysis/article/1844227">2019 budget</a>, which was also based on exports of 3.88mn b/d. The 2019 budget also ramped up public spending.</p><p>Iraq has not approved a new budget for 2020. But it has suffered from production restrictions under the Opec+ agreement and low oil prices, with <a href="https://direct.argusmedia.com/newsandanalysis/article/2163924">oil revenues so far this year</a> proving insufficient to cover the cost of salaries and pensions. Last month, Iraq had to pass an emergency borrowing bill to cover deficit spending for the rest of 2020. It is also looking to <a href="https://direct.argusmedia.com/newsandanalysis/article/2153294">reduce its reliance on oil revenues</a> in the longer term.</p><p>Regarding Iraq's oil projects, Iraq's overlapping ministerial bureaucracy continues to delay the launch of the fifth licensing round, Ismael said. In April 2018, Baghdad <a href="https://direct.argusmedia.com/newsandanalysis/article/2075588">awarded</a> six oil and gas blocks with an aim of boosting gas supply.</p><p>There are also "workflow" delays at the 5.6 trillion ft³ (157bn m³) Akkas gas field near the Syrian border, Ismael said, but ministry aims to conclude a contract within the next six months. The field was awarded to South Korea's Kogas in 2011, but was seized by Islamist militants Isis during its occupation of northwestern Iraq. Investment interest in the field has been muted since 2017 when Iraqi forces regained control from Isis. The drawdown of US troops in Iraq has increased concerns that Isis could regroup.</p><p>In May, finance minister Ali Allawi <a href="https://direct.argusmedia.com/newsandanalysis/article/2147087">announced</a> that an agreement had been reached with Saudi Arabia to allow Saudi companies to invest in the field.</p><p>And Basrah Gas Company (BGC), a joint venture between Shell, state-owned South Gas and Japan's Mitsubishi, plans to start up the first of two 200mn ft³/d (2.1bn m³/yr) natural gas liquids (NGL) plants by the end of 2022, Ismael said. The facilities will process associated gas the Rumaila, Zubair and West Qurna 1 oil fields. </p><p>In October, Ismael <a href="https://direct.argusmedia.com/newsandanalysis/article/2151797">said</a> BGC had reviewed a business plan to bring forward the construction date to 2023, from 2027 previously.</p><p class="bylines">By Rowena Edwards</p></article>
