Iraq initially signs gas deal with Pakistani energy firm

Baghdad, July 15 (Xinhua-ANI): Iraq Sunday signed a preliminary deal with a Pakistani energy company to explore for natural gas in eastern Iraq, an oil ministry official said.

"The Iraqi Oil Ministry is signing a preliminary contract with Pakistan Petroleum to explore for natural gas in Iraq's eastern provinces of Diyala and Wasit," Asim Jihad, head of the ministry's media office, told reporters.

Late in May, the Pakistani company won exploration concession during the country's 4th energy auction. The company is due to work in a 6,000 square km block stretches in Iraq's eastern provinces of Diyala and Wasit with presumed natural gas reserves.

The company won the contract after it offered 5.38 U.S. dollars per barrel of oil equivalent, and was accepted by the Iraqi ministry.

Iraq's 4th energy auction offered 12 new oil and gas exploration blocks, but only three contracts were awarded to foreign energy companies.

Except for the Pakistani company, the Iraqi oil ministry also awarded two consortia led by Kuwait Energy and Russia's Lukoil who will sign their preliminary deals on Monday and Tuesday respectively.

The three deals are still need to be approved by the Iraqi cabinet before signing the final deals with the companies.

In Iraq's previous three licensing rounds which first launched in 2008, the country has awarded 14 service contracts for the development of discovered oil and gas fields, in addition to the Ahdeb oil contract in eastern of the country.

The ministry also signed a major joint venture deal with a consortium of Royal Dutch Shell and Mitsubishi to capture and monetize associated natural gas produced in southern Iraq.

The country has proven reserves of 112 trillion cubic feet (3. 17 trillion cubic meters) of natural gas, but because of the poor infrastructure of the oil and gas industries, the country is only producing 1.5 billion cubic feet a day.

The country depends on oil revenues for nearly 95 percent of its budget.

In 2010 Iraq announced its proven oil reserves had increased to 143.1 billion barrels rising from the previous estimation of 115 billion barrels. (Xinhua-ANI)