Researcher Shatha Khalil *
Translated by : mudhaffar al-kusairi
Around 5000 years ago, mankind knew petroleum and natural gas, which contained organisms that could not be seen by the naked eye (microscopic) , such as algae and primary organisms that had accumulated over the years in the layers of the earth and oceans, and the residues were compressed under the sedimentary layers. As a result of pressure and heat , these residues and organic matter after thousands of years have become natural gas, noting that the natural gas is not much different from petroleum, both of which arise under the same conditions, where they are often found in underground or underwater fields.
Natural gas is lighter than oil, it forms a higher layer of the oil layer, which is a gas covering the oil, where accompanying it so it was called the associated gas.
Natural gas is becoming increasingly important as an environmentally friendly energy source that can fuel economic growth in many parts of the world today, and for decades to come.
LNG provides less polluting natural gas from production areas away from distant markets, where additional imported supplies are needed.
The market flexibility of LNG is helping to improve supply security around the world, and these are just two Catalysts for LNG to be one of the fastest growing energy markets in the world, with demand expected to be more than double to reach about 480 million tons per year (MTA). Over the next twenty years.
Natural Gas in Iraq:
Iraq ranks 11th among the world’s natural gas-rich countries after Russia, Iran, Qatar, Saudi Arabia, the United Arab Emirates, the United States, Nigeria, Venezuela and Algeria, with proven reserves of 112 trillion cubic feet.
The total reserves of free gas is 32.7 trillion cubic feet and represents 25% of Iraq’s gas reserves, and does not include many areas of Kurdistan invested in recent years, it is hoped to advance its ranking, if recent developments are calculated, and when it completes its exploration, especially in deeper layers, which have been disrupted for decades due to the unstable security situation.
The history of the gas industry in Iraq, at the commercial level dates back to 1927, and although Iraq has a huge wealth of natural gas associated with the production of crude oil and free gas in terms of the large volume of proven and potential reserves, but the production of marketed natural gas is not commensurate with the total production Natural gas, not commensurate with what Iraq has large reserves, as well as the decline in the level of gas industry in Iraq and the low capacity to convert natural gas to gas products enhance the added value of this industry and the momentum of other industries and sectors.
Foreign oil companies were not interested in investing gas associated with oil production in Iraq when the discovery of oil in the Baba Karkar field in Kirkuk in 1927, and since that time the associated Iraqi gas is wasted by burning, in addition to the closure of many gas wells in some fields, including: Kormor, Chamchamal, and Khasham Al Ahmar .
Interest in the use of natural gas began to be limited in the late 1950s.
The Iraqi government worked in the sixties of the last century to build important projects to invest gas in Basra, including the Najibiya power plant and fertilizer plant in Abu Falous, paper plant in the Nahran Omar and Shuaiba power plant.
The actual interest in gas continued in the seventies in Iraq, where this period was described as gold, to invest gas in Iraq, both in the production side through the National Oil Company or in the consumption side through the Ministry of Industry and the General Electricity Corporation, and the construction of new projects continued until the early years of the eighties despite the conditions of war with Iran.
“The value of gas waste in Iraq is estimated at $ 45 billion annually as a result of burning the gas associated with oil extraction.”
All Arab oil producing countries except Iraq have made efforts to reduce waste in the process of burning natural gas associated with oil, and use the resulting savings to generate energy and raw materials for fertilizers and the petrochemical industry , so in 2013, their crude oil production was approaching 24 million barrels per day, and gas burning at 21.8 billion cubic meters, by 2017, crude oil production had exceeded 26 million barrels per day and gas flaring increased to 25.5 billion cubic meters.
In Iraq, the increase in gas flaring was risen with oil production rising from 3 to 4.5 million barrels per day, while the flaring rose from 13.3 billion cubic meters to 17.8 billion cubic meters per day by 2017, and Iraq must learn from its neighbors to initiate a program to reduce wastage but not work on the ground.
According to the experts in this field , the capacity of processing associated gas burning operations in Iraq was slightly more than 16 billion cubic meters in 2002, the same percentage remaining so far, where the average gas statistics in Iraq indicated to produce 19.2 billion cubic meters and consumption of 7.3 billion cubic meters between September 2008 and June 2017, this means that the operation of wasted burning amounted to 11.9 billion cubic meters, or 62 percent of the production or the value of 196 thousand barrels of oil per day.
Despite the price of a barrel of crude oil reached to about $ 70, the waste resource of gas worth $ 45 billion annually, enough to build a whole new gas industry in Iraq.
Studies conducted in June 2017 confirm that crude oil production in Iraq has increased again, which means that the burning of gas has also increased 15.9 billion cubic meters, which is equivalent to about 260 thousand barrels per day or a loss of $ 20 million a day, and that the effective use of gas will free up additional crude oil for export, improve the environment, create jobs and develop other industries, and the issue for Iraq is much more than this.
The average gas statistics in Iraq to produce 19.2 billion cubic meters and consumption of 7.3 billion cubic meters between September 2008 to June of 2017, which means that the process of wasted burning amounted to 11.9 billion cubic meters, equivalent to 62% of production or the value of 196 thousand Barrels of oil per day.
It continued, “With the price of a barrel of crude oil to reach about $ 70, the waste resource of gas worth $ 45 billion annually, enough to build a whole new gas industry in Iraq,” especially with increasing demand for gas in global markets.
Increasing global demand for LNG:
Global gas demand is expected to grow 1.6% annually until 2024, boosted by consumption in China, which accounts for more than a third of demand growth, the International Energy Agency said.
According to the agency, China’s effort to switch from coal to gas in power generation and natural gas in domestic use, in order to improve air quality, under the initiative «Blue Skies» will play a key role in driving demand.
Keisuke Sadamori, director of energy security and markets at the International Energy Agency, said China’s gas demand is expected to grow on average by 8 percent, down from double-digit growth in the past few years as its economic growth slows, but still accounts for about 40 percent. % of the increase in global demand in the coming years.
The Asia-Pacific Ocean region will remain the largest source of gas consumption growth in the medium term, averaging 4% annually, and will account for about 60% of the total increase in consumption until 2024.
The interconnectedness of the global LNG market means that LNG export prices can sometimes be separated from the Henry Hope Index, which represents the domestic price of US natural gas, and higher demand or the prospect of cooler weather in North Asia at time can lead to increase the price of liquefied natural gas in the United States, even when the domestic market is calm.
Indicators confirm the ability of LNG to improve relations between the various international gas markets, and to increase the convergence of prices between different regions of the world, and this will be the first time we talk about a real world gas price, so setting a global price for gas is an important step not only to make the LNG market more efficient, but also to seek to mitigate the potential impact of climate change.
In sum, Iraq has a tremendous wealth wasted and burned daily, and it was possible to invest that wealth to develop the Iraqi economy, especially since the obvious global gas price will allow large companies and price controllers to estimate the cost of conversion between coal, gas and other fuels produced accurately, and in line with the increased investment and exports represents another sign of natural gas acceptance, a major global energy source for decades to come.
Economic Studies Unit
Rawabet Center for Research and Strategic Studies