Saudi Arabia in Iraq gas project talks

MEED    28 August 2020 (Last Updated August 28th, 2020 14:18)

Saudi Arabia in Iraq gas project talks

The Ratawi gas hub project will help capture and process natural gas

Saudi Arabia is in talks over a potential $2.2bn investment in Iraq’s planned Ratawi gas hub project, according to industry sources.

Earlier this month, US-based Honeywell and Iraq’s Ministry of Oil agreed to work together on the development of the project, which is located in southern Iraq.

Commercial agreements worth $8bn were reached during a signing ceremony between US energy companies and the government of Iraq during Iraqi Prime Minister Mustafa al-Kadhimi’s visit to Washington.

US-based companies Honeywell and Bechtel signed a joint memorandum of understanding (MoU) with Iraq’s Ministry of Oil for the Ratawi gas hub project in July 2019, but the deal fell apart.

Officials have since said that Bechtel exited the project as a result of differences over the joint-venture’s leadership.

Under the terms of the original MoU, the project would have captured 300 million standard cubic feet a day (scf/d).

The project would have cut Iraq’s gas flaring by nearly 20% and reduced Iraq’s dependence on Iranian gas imports.

In May this year, former Iraqi electricity minister Luay al-Khatteeb said Honeywell was working with new partners to revive negotiations on the gas hub project.

He also said a possible consortium of US-based GE, Iraq-based Uruk and Saudi Arabia-based Acwa Power and Saudi Aramco could be interested in developing the project.

Both the US and Saudi governments could potentially benefit politically if this project goes ahead, as they both want to see Iraq reduce its dependence on Iranian gas imports.

In May, Saudi Arabia struck a deal with Iraq to boost investment in the development of Iraq’s western Akkas gas field.

One of the driving forces behind this deal was understood to be a desire to end Iraq’s reliance on Iranian gas supplies.

The Akkas gas field is Iraq’s biggest gas field. It was discovered in 1992 and began production of natural gas and condensates in 1993.

Iraq’s Deputy Prime Minister Ali Allawi has said that his country’s reliance on Iran for gas imports can be reduced over the medium term if the country forges closer ties to Gulf nations.

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