Iraq launches 6th licensing for gas exploration blocks to halt Iranian imports

Iraq has a launched a sixth licensing round for natural gas exploration covering 11 blocks, the country's oil minister said June 18, as OPEC's second biggest producer seeks to wean itself off gas and electricity imports from Iran.

The sixth round will help Iraq meets its domestic gas needs, particularly for power generation and the industrial, petrochemical and fertilized sectors, Hayan Abdul-Ghani said in a ministry statement.

The eleven blocks are mainly located in the country's western governorate of Anbar and the northern governorate of Nineveh, the minister said.

Abdul-Ghani invited international oil companies to participate in the exploration, development and production of the blocks.

Iraq is hungry for foreign investment to develop its energy sector, particularly gas, in order to end flaring of its associated gas, which accounts for the majority of the country's production and is subject to OPEC+ oil production quota restrictions.

Gas flaring

Most of Iraq's associated gas production is burned, making the country the world's second-worst flaring nation after Russia, according to the World Bank.

To compensate for lost gas production, Iraq imports Iranian gas and electricity, which are subject to US sanctions. Although Iraq receives US waivers to continue importing Iranian energy products, it is under pressure from Washington to reduce reliance on supplies from its neighbor.

The sixth round comes on the heels of the launch of an extension of the fifth round.

On May 15, the ministry invited international oil companies to bid on developing 13 fields and exploration blocks spread across the country as part of the extended fifth licensing round, which was launched in 2018 but did not see contracts signed until February, with several blocks left unawarded.

The goal from the round launched on May 15 is to produce no less than 1 Bcf/d of gas from awarded licenses, Abdul-Ghani said in May.

As part of the fifth licensing round, Iraq awarded in February contracts to two Chinese companies -- Geo-Jade and Hong Kong-listed United Energy Group -- and one UAE company, Sharjah-based Crescent Petroleum, to develop six border oil and gas fields.