Iraqi, US companies sign agreements to capture, burn gas for power

Iraqi and US companies signed a series of agreements on Wednesday to capture natural gas traditionally flared from Iraq's oilfields and use it to produce domestic power while reducing dependence on neighbouring Iran for energy.

Boosting the energy independence of Iraq, one of the world's top oil and gas producers, and reducing reliance on Iran is a top US foreign policy goal. But Iraq's oil and gas fields have suffered years of under investment and since 2018, Washington has had to issue Iran sanctions waivers to Iraq that allow it to buy power imported from the Islamic republic.

The agreements, signed in Washington in the presence of Iraqi Prime Minister Mohammed Shia al-Sudani and US officials, are meant to spur investment in processing 300 million standard cubic feet per day of natural gas at the Bin Umar oilfield.

Halfaya Gas Company, an affiliate of Iraq's RAS Group, signed an agreement with Iraq's South Gas Company to invest in processing the gas.

US companies signing memorandums of understanding with Iraqi entities on the projects included KBR, Baker Hughes, and GE. The companies did not disclose projected monetary value of the agreements.

Collecting and burning the gas to generate power can help fight climate change as simply flaring it wastes the fuel while doing nothing to reduce demand for additional gas supply from Iran.

The agreements also call for 400km of pipelines to transport the gas, a marine export terminal, a gas processing plant and other facilities.

Iraq has the potential to “harness immense natural gas resources, invest in new energy infrastructure and renewables, and achieve energy self-sufficiency by 2030" said a statement jointly issued by the US and Iraq during a visit to Washington by Sudani this week.

Geoffrey Pyatt, assistant secretary for energy resources at the US state department said the projects would be developed over the next couple of years. “Because they have underinvested over many years in their oil and gas sector, they have tremendous potential to do much more today,” Pyatt told Reuters.