Gas in Iraqi Kurdistan: Market Realities, Geopolitical Opportunities

U.S. and Iraqi Kurdish officials discuss the future of the region’s natural gas sector, including proposals for surmounting various political and commercial hurdles.

 
On January 12, The Washington Institute held a virtual Policy Form with Matthew Zais, Barozh Aziz, and Rob Waller. Zais is the principal deputy assistant secretary for the U.S. Department of Energy’s Office of International Affairs. Aziz is a senior advisor to the Kurdistan Regional Government’s minister of natural resources. Waller is the U.S. consul-general in Erbil, America’s top diplomat to the Kurdistan Region. The following is a rapporteur’s summary of their remarks.

 
Matthew Zais

Iraq’s gas situation is unique. Although the country possesses vast natural gas resources, it flares significant amounts of this potential supply and therefore remains dependent on neighboring countries for its energy needs. Gas resources in the Kurdistan Region of Iraq (KRI) will be critical in developing a solution to this challenge.

KRI gas issues are not simply another aspect of U.S. policy toward Iran. Developing this sector will permit greater Iraqi energy production for both domestic consumption and exports to Turkey and other neighbors. It will also allow for greater economic integration inside the KRI and with federal Iraq, creating benefits for the entire country. The United States recognizes the importance of energy cooperation with the KRI, as the International Development Financing Corporation has demonstrated by supporting American oil and gas companies working on projects in the region.

Any effort to further develop the KRI gas sector will face several challenges. Political hurdles include a dearth of collaboration between international oil companies and Kurdistan’s Ministry of Natural Resources. The abundance of sour gas in the area will require additional investment and technical expertise. From a commercial standpoint, the lack of a benchmark gas price is the central problem. Despite these barriers, the KRI has the potential to produce 40 billion cubic meters of gas annually by 2035, compared to the current level of 5 bcm per year. This vision can be achieved through a gradual process rather than an approach that focuses solely on large-scale projects.

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Πηγή: washingtoninstitute.org