Iraq announced on Monday it has signed a final gas exploration contract with Pakistan Petroleum to explore gas block 8, covering an area of 6,000 square km in Diyala and Wasit provinces in eastern Iraq.
Iraq, holder of the world’s 10th-largest gas reserves, said the gas will be used in the domestic market, mainly for power generation, with the option of exporting gas once domestic needs are met.
“Developing exploration block 8 could be very promising as a source of gas to feed the country’s power plants in future and open the way for Iraq to be a major exporter,” Ahmed al-Shamma, Iraq’s deputy oil minister, said during a press conference.
Baghdad has signed a string of contracts with foreign companies to develop its oil industry as it seeks to rebuild after years of war and economic sanctions.
Prime Minister Noori Al Maliki’s administration is facing a major challenge as it tries to lure foreign investment into Iraq’s energy sector.
Iraqi bureaucracy is marred by red-tape which is also blamed for holding much foreign investment.
Iraq’s fourth energy auction in May attracted a handful of international companies, including Pakistan Petroleum, Kuwait Energy and Lukoil while other energy giants opted out citing tough contract terms drawn up by Baghdad.
“We are planning to spend a minimum of $100 million to start exploration activities and we might need additional $400 million as investments,” Pakistan Petroleum chief executive Asim Khan told reporters in Baghdad.