Indian Oil Corporation and Engineers India Ltd mulls LNG terminal in Iraq

A team comprising members from the state-run Indian Oil Corporation and Engineers India Ltd will soon be traveling to Iraq to assess the feasibility of establishing a liquefied natural gas (LNG) terminal and transporting the gas to India. Currently, Iraq lacks the necessary technology to capture gas from its hydrocarbon blocks, resulting in the gas being burned and released into the environment. In light of the emerging partnership between China, Iran, and Saudi Arabia, India is reassessing its energy diplomacy in the region and is seeking to build closer ties with Iraq as part of this effort. By considering the option of an LNG terminal, India aims to diversify its energy supplies and enhance its energy security. The transported gas can be converted back to LNG for a variety of uses, including city gas distribution, as well as for power, fertilizer, and steel sectors.

Iraq holds one of the highest gas flare rates globally because of its limited capabilities to capture and process the gas, which would enable its conversion into fuels or its export as LNG. Global estimates suggest that Iraq flares approximately 50 million standard cubic meters per day (mscmd) of natural gas, while India’s LNG imports in 2022-23 amounted to 19.9 million tonnes, equivalent to 71.6 mscmd of natural gas. In addition to exploring LNG possibilities, the Indian government is also considering resuming operations at ONGC Videsh Ltd’s exploration block in Iraq, which has been under force majeure since 2003. This exploration block, known as “Block 20,” covers a vast area of 10,500 square kilometers in the western desert of Iraq and was originally acquired by OVL in November 2000. However, due to security concerns, force majeure was declared in 2003, suspending operations.

In conclusion, a team from Indian oil companies will be visiting Iraq to evaluate the potential for setting up an LNG terminal and transportation of gas to India. This move is driven by Iraq’s lack of technology to capture gas from its hydrocarbon blocks. India’s desire to enhance its energy diplomacy in the region, as well as diversify its energy supplies and strengthen its energy security, are the key factors behind this exploration. Additionally, considering the high gas flare rates in Iraq and India’s significant LNG imports, there is an opportunity for India to further explore the LNG potential in Iraq. Lastly, the Indian government is also looking to resume operations at ONGC Videsh Ltd’s exploration block in Iraq, which has been on hold since 2003 due to security concerns.

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