I do receive the occasional comment from friends and readers ... especially when I write about Iraq. But my column last week about Iraqi refineries and how Iran is going to help the Iraqis shape its configuration raised more comments.

A friend said: “Sadly, this is the least you can say.”

A foreign journalist said “My heart breaks for Iraq and what could have been. When I was covering it, the Iraqi industry was filled with brilliant and very capable professionals. There was so much hope for the future ... sad to see what is happening now.”

A former manager in the industry said: “So sad to see Iraq oil industry reaches to this shameful level because of bunch of corrupt crooks in the government and dumb officials at MoO (Ministry of Oil), which replaced the brilliant experts who were expelled in different dirty ways from the ministry. This is what happens when the occupation brought the scum of the earth to rule us.” The enthusiasm surrounding the appointment of the Minister Jabbar Al Luaibi, a hard working son of the industry, is evaporating as his hands are tied in a system he cannot bypass. Another sad aspect is what is happening on the gas side.

The oil minister in 2009 signed deals to turn over development of many fields to international oil companies without securing its unquestionable responsibility to develop the gas. The result is increasing the quantity of flared gas since then.

In 2009, the flared gas was 623 million cubic feet a day (mcfd), but in 2014 this has grown to 1,137-mcfd with an actual reduction of the utilised gas as well due to a lack of renovation of gas processing facilities.

Flared gas

In the first quarter of 2015, about 1,800-mcfd was flared according to the Ministry of Oil website. Perhaps it is even more now as the MoO stopped publishing numbers for oil and gas on its website. The flared gas is about the equivalent of 300,000 barrels a day of oil, costing by today’s prices of $55 (Dh201.85) a barrel more than $6 billion a year. That would have been sufficient to build huge gas processing and associated structures.

The only answer Iraq had to this dire situation was to import gas from Iran to fire power stations instead of processing the flared gas. Without going too much into the details of the deal, many agree that it is highly opaque, questionable and very costly to Iraq.

To be fair, it was not MoO’s idea, but from a former minister of electricity who did not last long enough and the MoO had to ride the wave. In my humble view, this is strictly political and in the process of welding Iraq more to Iran rather than developing its own resources.

Recently, all of a sudden, the South Gas Company (SGC) general manager Ihsan Abdul Jabbar said that Baghdad is looking for foreign partners to build and operate a second venture to process gas, as reported by NewsBase on February 8. What a great idea after billions had gone up in smoke.

I calculate from the same article that, in the south, 1,223-mcfd of gas is flared and that the utilised gas is only 876-mcfd.

Falling short of targets

So what is the Basra Gas Company (BGC) doing? The company was established in 2013 as a joint venture between SGC, Shell and Mitsubishi to capture associated gas from Rumaila, West Qurna 1 and Zubair oilfields. While some progress has been achieved, it is believed that the company is falling short of its targets and the gas is flared mercilessly.

Simon Daman Willems, its managing director. said: “We are inspecting and repairing 1,800 kilometres of pipelines, and nine compressor stations in the Rumaila field, in addition to work being carried out on the West Qurna 1 pipeline. That will enable us to process associated gas from West Qurna for the first time by connecting the field to the North Rumaila processing plant.”

He also said that “West Qurna 1 today flares around 150 million cubic feet per day, enough on its own to power one million homes and produce 16 million LPG cylinders per year.”

But the question must be asked, does this work take more than four years and who is responsible for the delay — BGC or the MoO? Or both?

While BGC expects to increase processing capacity to around 2,000-mcfd by the end of 2018, I believe this target is suspect as the processing capacity — if completely maintained and renovated — cannot exceed 1,050 mcfd. And the time is too short to double it.

BGC awarded the front-end engineering and design study for a 500-mcfd plant two years ago, but no further step is reported. Before building new plants, I want to know, as a minimum, why Iraq cannot use the first stage gas after very little processing, something it did 50 years ago.

The writer is former head of the Energy Studies Department at the Opec Secretariat in Vienna.