Baker Hughes agrees new Iraq gas capture project

US oil field services firm Baker Hughes has signed on to develop a new project in Iraq aimed at eventually capturing 200mn f3/d of flared gas for power generation. The deal comes as Baghdad looks to reduce its reliance on gas imports from Iran.

The project involves the construction of modular gas processing plants at the Nassiriya and Gharaf oil fields in the southern Dhi Qar province to handle up to 200mn f3/d of gas which would otherwise be flared, the oil ministry said today.

Signed with state-owned South Gas Company, the deal comes more than three years after Baker Hughes agreed to build a natural gas liquids processing plant at Nassiriya in 2017.

The oil ministry said Baker Hughes started design, manufacturing and construction preparations earlier this year and that the project is now slated for completion around the middle of 2024. The captured gas will be used for power, while the LPG and condensate will meet domestic demand for cooking gas, with any surplus exported.

Despite being Opec's second largest oil producer, Iraq also holds one of the world's worst records for flaring associated gas, burning 17.37 bn m3 in 2020, according to the World Bank.

Lacking the infrastructure to capture and utilize its gas, the country has relied on neighbouring Iran for both power and gas imports. But these have been disrupted over the last year due to Iraq's financial struggles. Iran slashed its gas supplies to Iraq for the second time in a year in September over mounting debts, resulting in the loss of more than 5GW of power over the border in Iraq.

The continuity of electricity and gas imports from Iran are conditional on Iraq securing sanctions waivers from the US. The most recent waiver was granted for a 120-day period through to 27 November, with Baghdad under pressure from Washington to reduce its reliance on Iran.

The situation has focused the oil ministry's attention on increasing its own gas production. Earlier this month, France's TotalEnergies signed a $27bn agreement to invest in four troubled energy projects, including a facilities to handle captured associated gas from a number of southern oil fields. The facility will process up to 600mn ft³/d split equally over two phases, supplying 1.5GW of power in the first phase and 3GW in the second.

By Adal Mirza