October 18, 2010 / 10:06 AM / in 10 years

Iraqi province wants more say over energy riches

* Anbar desert could hold huge hydrocarbon reserves

* Sunni province accuses Baghdad of ignoring it

By Ahmed Rasheed

RAMADI, Iraq, Oct 18 (Reuters) - Iraq’s western Anbar province is demanding more control over its potentially huge energy reserves ahead of this week’s auction of gas fields, including the vast desert province’s Akkas reservoir.

Anbar’s government last week rejected Baghdad’s plan for the auction due to the possibility surplus gas will be exported, a move that could deter companies from bidding for Akkas on Oct 20. [ID:nN12200489]

Anbar’s opposition reflects deep discontent in Iraq’s Sunni heartland about the Shi’ite-led central government in a country where a volatile mix of religious and ethnic groups allowed bloodshed to erupt after the 2003 U.S.-led invasion.

Thirteen foreign firms including France’s Total (TOTF.PA) and Italy’s Eni (ENI.MI) have registered to bid for Akkas, Mansuriyah near the Iranian border in volatile Diyala province and Siba in the relatively peaceful southern oil hub of Basra.

Together the fields have estimated reserves of 11.23 trillion cubic feet of gas. Akkas alone is estimated at 5.6 tcf.

“We are against the approach of the central government and we will be against any contract between the central government and any company in the world,” Anbar Governor Qasim Abid said.

“We have our own vision of how to develop this (field).”

Mainly Sunni Anbar province, controlled by al Qaeda in the years following the U.S.-led ouster of Saddam Hussein, has been relatively quiet since tribal sheikhs joined forces with U.S. troops to drive out Sunni Islamist militants in 2006 and 2007.

Iraq needs to exploit its vast oil and gas wealth to rebuild after decades of dictatorship, war and economic sanctions. About 95 percent of the federal budget comes from oil revenues.

Last year it auctioned off development contracts in 11 major oilfields, winning deals that have the potential to more than quadruple oil output capacity to near Saudi levels of 12 million barrels per day. It recently upped its crude reserve estimates to 143 billion barrels.

Oil Minister Hussain al-Shahristani says it may have billions more, particularly in the unexplored deserts of Anbar.

Iraq’s gas sector has been largely ignored. Gas produced as a by-product of oil drilling is flared off, but the government wants to halt the waste and exploit undeveloped gas reserves.


Anbar’s potential for both gas and oil production has not been fully assessed and Iraq’s working oilfields are concentrated in the south and north.

“We demand the oil ministry start exploration in Anbar because it’s unfair to develop and start production from oilfields in some provinces and ignore the billions of barrels of crude we have,” Anbar provincial council leader Jassim Mohammed said.

Anbar authorities warned they would refuse to provide security to foreign firms working in Akkas and would use all means including “civil revolt” if Baghdad ignores their demands.

“Anbar is rich with huge resources of oil and gas, but the oil ministry preferred to start exploration works in other provinces and ignore us for no convincing reason,” said Sadoun Obeid, deputy head of the Anbar council.

As an example of Anbar’s potential, Obeid said a farmer in the town of Rawa this year drilled a water well to irrigate his farm but hit a gas reservoir instead. Anbar authorities urgently informed the oil ministry, which sent a crew to seal the well.

The central government says that under Iraqi law, only it can sign contracts to exploit energy resources. But some provinces have rebelled.

Baghdad is embroiled in a dispute with the semi-autonomous Kurdish region over contracts the Kurds signed with companies to develop northern fields. Baghdad says the contracts are illegal.

Last month the oil ministry accused provincial officials and local police in Wasit province of trying to raid the al-Ahdab oilfield being developed by Chinese oil company CNPC.

Oil Ministry spokesman Asim Jihad criticised Anbar’s stance so close to the auction.

“Such statements at this time are detrimental to the Iraqi economy, detrimental to the efforts of Iraq to lure foreign investments to revive its oil sector,” he said. (Additional reporting by Fadhel al-Badrani and Serena Chaudhry; Editing by Jim Loney and Jon Hemming)

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