Iraqi Government Invites Bids for Natural Gas Exploration Blocks to Enhance Self-Sufficiency in Hydrocarbon Sector

The Iraqi government has issued an invitation to companies for the bidding of 11 exploration blocks containing natural gas reserves. This move is aimed at enhancing Iraq’s self-sufficiency in the hydrocarbon sector. As stated by the Oil Ministry, eight of these blocks are situated in the western region of the country, one is located in northern Iraq, and two are positioned in central Iraq. Reuters reported that all of these areas represent new opportunities for oil and gas exploration. Despite being the second largest oil producer in OPEC, Iraq currently flares a significant portion of the associated gas produced from its oil wells rather than capturing and utilizing it for power generation. To meet its power generation needs, Iraq heavily relies on imported natural gas from neighboring Iran, accounting for up to 40% of its requirements. In light of this, the United States has been pressuring the Iraqi government to change this situation and instead tap into its own natural gas reserves. Consequently, the Iraqi government recently announced its intention to cease natural gas imports by 2026. Prime Minister Mohammed Shia al-Sudani of Iraq recently remarked, “We are burning money,” alluding to the vast quantities of natural gas Iraq flares daily (1,200 cubic meters) and the volume it imports from Iran (1,000 cubic meters). Al-Sudani explained that this practice incurs an annual cost of no less than $4 billion for Iraq. However, it is worth noting that this is not the first time Iraq has pledged to halt gas flaring and utilize it effectively. Iraq is a participant in the Zero Routine Flaring initiative led by the World Bank and the UN, which aims to eliminate routine flaring by 2030. Yet, little progress has been made thus far. Iraq possesses substantial natural gas reserves, estimated at approximately 131 trillion cubic feet, making it the twelfth-largest reserve holder globally. Nevertheless, the country grapples with frequent power outages due to insufficient fuel for its power plants.