INTERVIEW - Iraq plans power boost after gas fields auction

DOHA Sun May 9, 2010 9:00pm IST

Related Topics

DOHA (Reuters) - Iraq plans to boost power capacity to 27,000 megawatts in four years after opening its gas sector to foreign investment and sealing a gas capture deal with Royal Dutch Shell, a minister said on Sunday.

The OPEC member would need to invest at least $3 billion to $4 billion per year to reach that target, Iraq's Electricity Minister Karim Waheed told Reuters on Sunday.

He did not say how Iraq plans to raise such funds. It has struggled to finance its previous power generation plans.

Reaching the ambitious power capacity target would depend mainly on finalising a venture with Shell to capture and use gas now being burned in the southern oilfields around Basra, and on output from three gas fields, which Iraq is auctioning off in September, Waheed said.

"This depends on both the gas fields -- the announcement for the third round -- and on capturing the burned gas deal with Shell," he said in an interview on the sidelines of an energy conference in Qatar.

Waheed said if Iraq does not come to an agreement with Shell, the ministry will have to rethink its power plans.

Iraq is close to signing a final deal between its South Gas Company, Shell and Japan's Mitsubishi, after it sent the final draft of the agreement to the cabinet for approval, Iraqi Oil Minister Hussain al-Shahristani said on Thursday.

Shahristani also said that Iraq will invite 45 international companies, which were prequalified for two oil auctions last year, to bid to develop Akkas gas field in Iraq's western desert, Mansuriyah gas field in eastern Iraq and Siba in the southern oil hub of Basra.

Waheed said he expects the gas fields now being tendered to start producing in two to three years.


Iraq plans to issue new tenders next week for installing turbines as part of the ministry's plans to boost electricity capacity, Waheed said.

In 2008, it said it had agreed a 1.5 billion euro ($2.03 billion) deal with Siemens for 16 gas turbines and a deal with General Electric worth $3 billion for 56 turbines. The turbines are expected to add nearly 9,000 megawatts of capacity over the next few years.

Iraq scrambled for ways to finance the purchase after a plunge in oil prices in 2008 deprived it of revenues and forced it to slash its 2009 budget three times. It had offered investors stakes in the electricity turbines it has ordered, and said it would repay investors from future electricity sales.

In March, the finance minister said Iraq raised $2.1 billion from local banks via a one-year treasury bond issue to fund electricity projects.

"Next week, we will tender for bids for installing turbines at two more sites, at Baiji for six turbines of 160 MW and Kirkuk for one turbine of 260 MW," Waheed said.

"Some 38 companies will participate and compete for the deals. Just to install the turbines, we've already bought the turbines."

Waheed put Iraq's available power capacity at 9,000 MW, and installed capacity at 11,000 to 12,000 MW. Demand is estimated to be at least 12,000 MW.

Frequent fuel shortages and constant maintenance are a main reason behind the shortfall in available power capacity in Iraq, where dilapidated infrastructure has been hit hard by years of war, insurgency attacks and underinvestment.

Seven years after the U.S.-led invasion, Iraq's national grid still only supplies a few hours of power each day. Intermittent electricity is one of the public's top complaints.

Baghdad, the capital, is expected to enjoy about eight hours of electricity a day when temperatures hit 50 degrees Celsius in the summer, Waheed said.

With the new power plans, Baghdad, with current 3,000 MW of power available, could finally have 24 hours a day of electricity in two years.

"In 2012, God willing, if we have enough gas and fuel available," he said.

(Reporting by Simon Webb; Writing by Rania El Gamal; Editing by Michael Christie)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 


Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 



Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage