Iraq Says Signed Contract With Kogas to Develop Akkas Field
June 1 (Bloomberg) -- Iraq signed an agreement with Korea Gas Corp. to begin developing the Akkas natural-gas field, an Oil Ministry official said, ending seven months of delays in progress at one of the country's biggest deposits of the fuel.
Representatives of Korea Gas and Iraq signed the contract today in a ceremony closed to the media, Sabah Abdel Kadhim, the deputy head of the Oil Ministry's licensing department, said in a telephone interview from Baghdad.
Korea Gas, known as Kogas, said in a regulatory filing on May 26 that it would acquire 100 percent of the rights to Akkas, up from a planned 50 percent stake, after its original partner, KazMunaiGas Exploration Production of Kazakhstan, unexpectedly withdrew from the project.
The government expects to sign agreements for two other gas fields at Mansouriya and Siba on June 5, Abdul-Mahdi al-Ameedi, the head of the ministry's licensing department, said in a separate phone interview.
Iraq has the fifth-biggest gas reserves in the Middle East and the world's fifth-largest crude oil reserves, according to data from BP Plc. While the government relies on sales of crude for most of its revenue, it wants to produce gas to fuel the nation's power plants, which have been unable for several years to meet demand. Production of electricity and gas, like oil, suffered from decades of war and sanctions, and Iraq is seeking foreign investment and expertise to boost output.
Kuwaiti, Turkish Investors
Kuwait Energy Co., Turkiye Petrolleri AO and Kogas secured the rights to develop gas at Mansouriya. Kuwait Energy and Turkiye Petrolleri won the bidding for Siba. Iraq awarded licenses for all three gas fields in October.
Mansouriya, Siba and Akkas together hold 11 trillion cubic feet of gas, Hussain al-Shahristani, the deputy prime minister for energy affairs and Iraq's former oil minister, said in October during the auction of licenses for the three fields. Akkas, in western Anbar province, contains 5.6 trillion cubic feet of gas, al-Shahristani said in May.
The government is also negotiating an agreement with Royal Dutch Shell Plc and Mitsubishi Corp. on a $12 billion plan to develop and capture gas that is being flared off and wasted in southern Iraq.
"I am optimistic that we will reach a final agreement next week," Deputy Oil Minister Ahmed al-Shamma said today by phone from Baghdad.
The signing for this gas-capture project has been delayed since last June, when the government approved the creation of a venture to be called Basra Gas Co. State-owned South Gas Co. would have a 51 percent stake in the venture, with Shell holding 44 percent and Mitsubishi the remainder.
Iraq has signed 15 gas and oil licenses since the U.S.-led invasion overthrew former President Saddam Hussein in 2003. The government has asked companies to begin this month submitting bids for a new, fourth round of exploration rights.
To contact the reporter on this story: Nayla Razzouk in Amman at nrazzouk2@bloomberg.net
To contact the editor responsible for this story: Inal Ersan at iersan@bloomberg.net
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