Indian government is in talks with Iraq to check the possibility of setting up a plant in Iraq to liquefy the excess petroleum gas that the Arabian country flares as waste product and import it into India, a senior government official said.
“Gas flaring in Iraq is huge. It’s almost as much gas we import each year. We can certainly look at having some liquefaction facility there. The challenges are not in terms of intent, but more related to visas and sending big teams to study and develop a plan on the ground,” the official said
The discussion was part of the joint commission meeting (JCM) between Iraq and India last month. The bilateral meeting, happening after a gap of 10 years, is second after the National Security Advisors meeting held last March.
Gas flaring has been an issue with Iraq. The country wants to end the burning of associated gas in the oilfields to cut down losses and reduce gas imports. Besides, there is a growing consensus of a link between gases flared in the air and rise in cancer cases.
Iraq burns 70% of the natural gas produced in its oil fields as a waste product. As per a World Bank estimate, Iraq flares about 16 billion cubic meters of gas per day. However, it has planned to end gas flaring in next two years. It has invited foreign companies to explore and develop natural gas reserves.
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Since the attack on two Saudi Aramco oil facilities in 2019 that forced Saudi Arabia to shut down half its total oil production, Indian government has drawn up a strategy to diversify as much as possible, and is planning to increase the ratio of term contracts as compared to spot purchases.
“We are also looking at oil coming from Guyana. Basically we are oil hungry and will explore wherever we can get good term deals. Right now the division between term and spot is 70:30, but 30% spot is also high. We are looking at more term deals so that we can actually calculate our outgo,” he said.
The official informed that Iraq has been giving “very good” discounts to India in the term contracts for oil imports. India has asked them to extend the credit period from 60 days to 90 days, which the Iraqi government plans to discuss with the oil companies.