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Iraq expects to initial Akkas gas deal within days

South Korea's KOGAS and Kazakhstan's KazMunaiGas won a deal on Oct. 20 to develop the western Akkas gas field.

December 1, 2010 4:08 by

Iraq expects to sign an initial contract for the Akkas gas field within days, a senior Iraqi oil official said on Wednesday, after a delay due to a row between the oil ministry and local authorities over exports.

South Korea’s KOGAS and Kazakhstan’s KazMunaiGas won a deal on Oct. 20 to develop the western Akkas gas field, near the Syrian border, in Iraq’s third energy auction since the 2003 U.S.-led invasion.

But the initial signing, originally scheduled for Nov. 14, was postponed. Iraqi oil officials said the delay was to give the companies more time to look over the contract, amid a dispute between the Iraqi government and provincial officials over the deal.

Deputy Oil Minister Abdul Kareem Luaibi told Reuters the ministry will be meeting with local officials from the Anbar province, where the field is located, over the coming days to clear up a misunderstanding over exporting gas from Akkas.

“They (Anbar officials) understood that we will export all the gas from Akkas, which is not true. We have a national system to distribute the gas,” he said.

“If we have a surplus we will export it through Syria, not just gas from Akkas, but surplus gas from all of Iraq.”

Luaibi said he saw no problems with going forward with signing the initial contract “within days.” The initial contracts will then be sent to the cabinet for final approval before a final deal is signed.

The Akkas deal became controversial when authorities in Iraq’s western Anbar province, the Sunni heartland and a former al Qaeda stronghold, said it would not allow the foreign companies to work there.

Iraq, holder of the world’s 10th largest gas reserves, has said the priority for the gas will be domestic consumption, mainly for power generation, but has left open the possibility of allowing exports once domestic needs are satisfied.

More than seven years after the U.S.-led invasion, Iraq’s national grid only supplies a few hours of power each day.

Iraq has plans to build a gas pipeline through Syria as part of a master plan to expand gas distribution throughout the country and possibly export any surplus.

Akkas has estimated reserves of 5.6 trillion cubic feet of gas.

(Reporting by Rania El Gamal; editing by James Jukwey)

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