Rystad Energy, an independent energy research and consultancy, predicts that gas developments in Iraq will overtake oil projects in 2019, measured in development-sanctioned resources
The research firm added that for the world’s fourth largest crude producer, natural gas is about to take the lead.
Aditya Saraswat, analyst on Rystad Energy’s upstream team, said, “Rystad Energy sees gas as the clear frontrunner in the region over the next four years.”
New developments are on track to triple the country’s gas production from just over one bcfd in 2017 to about three bcfd in 2022, according to Rystad Energy.
“This will allow the country to satisfy its own growing domestic demand for gas and possibly even launch Iraq into the global market as a gas exporter for the first time,” he added.
The shift is driven by more favourable investment conditions in the Kurdistan Region of Iraq (KRI), combined with consistent export revenues and improved regional security, boosting international oil companies’ (IOCs’) appetite for investment in the region.
Upcoming final investment decisions (FIDs) on new projects are dominated by gas developments in KRI, in sharp contrast to oil projects that have typically reigned supreme in Federal Iraq (FI).
Previously, inadequate infrastructure and weak incentives meant that most of Iraq’s gas produced was simply flared, with only a small portion feeding power plants for commercial use.
Upstream developments in the past were also generally oil fields under Federal Iraq’s jurisdiction, and domestic gas demand was addressed primarily through imports from Iran.
Pacified by output in FI, IOCs were also largely uninterested in exploring options in KRI due to the region’s political instability. However, much has changed in recent years as gas imports have become more expensive and the political situation in KRI has calmed down.
Rystad Energy forecasts that new gas developments in the KRI could potentially add 3.3 bbo by 2022, based on analysis of sanctioned projects.
