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KOGAS to move ahead with Akkas gas field development in Western Iraq

Daewoo Engineering wins Akkas Gas processing plant

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolThe South Korean Gas Corporation (KOGAS) and the local Iraq National Oil Company (INOC) have awarded to Daewoo Engineering, & Construction Corporation (Daewoo Engineering) also from South-Korea, the engineering, procurement and procurement (EPC) contract for the gas central processing facility (CPF) of the Akkas gas field in the western of Iraq.

Located in the Al-Anbar Province, 460 kilometers northwest of Bagdad, close to the Syrian border, Akkas is the first non-associated gas field to be developed as part of the license rounds proposed by the Iraq Federal Government to foreign companies after the second Iraq war.

KOGAS_Iraq_Akkas_Gas_Central_Processing_Facility_MapFrom the actual level of exploration the Akkas gas field is expected to hold between 3.3 and 5.6 trillion cubic feet (tcf) reserves of non-associated natural gas from which KOGAS and its partner NOC are planning to extract more than 2.1 tcf.

In October 2010, KOGAS in joint venture with KazMunaiGas (KMG) from Kazakhstan and the Iraq state owned company INOC applied to participate to the reverse auctions of the third license round organized by the Iraq Federal Government.

These license rounds were based on Technical Service Contracts (TSC) meaning that the winner of the bid is supporting all investment until a plateau production level above which it is compensated by a remuneration fee per barrel produced.

Since the contract is defined as “technical”, this remuneration fee is fixed regardless the commercial value of the oil and gas

In October 2011, KOGAS and its partners were awarded the Technical Service Contracts (TSC) for the Akkas gas field with a remuneration fee of $5.50 per barrel of oil equivalent (boe) based on a plateau production of 400 million cubic feet per day (cf/d) during 13 years.

KOGAS to meet Iraq Government plateau production

In the meantime KMG withdrew from the project and sold its shares in the Akkas gas field to KOGAS to stand alone with the local NOC and share the working interests such as:

 – KOGAS 75% is the operator

 – INOC25%

In addition to Akkas, KOGAS has interests in three other oil and gas field development projects in Iraq:

 – Badra crude oil field in the northeast of Bagdad with Gazprom, Petronas, TPAO and OEC

 – Mansuriya natural gas field in the southeast of Bagdad with TPAO, Kuwait Energy Co. (KEC) and OEC

 – Zubair crude oil field near Basra in the south of Iraq with Eni, Occidental Petroleum (Oxy) and MOC

KOGAS_Akkas_Gas_Processing_Facility_ProjectThe Akkas gas field is covering 986 square kilometers and should require $2.66 billion capital expenditure from KOGAS as part of its Technical Service Contracts (TSC).

In October 2012, KOGAS completed the front end engineering and design (FEED) for the development of the Akkas gas field

Despite the danger of the Al-Anbar Province along the Syrian border where KOGAS contractors had workers killed and kidnapped in April, KOGAS received four bids for the EPC contract  of the Akkas gas central processing facility (CPF).

From this call for tender, the South-Korean Daewoo Engineering company submitted the most competitive bid, just below $800 million. 

With a capacity of 400 million cf/d of natural gas in line with the contractual plateau production level, this EPC contract includes the:

 – Akkas gas central processing facility (CPF)

 – Associated gas gathering inlet pipeline

 – Export pipeline

In awarding the Akkas gas central processing facility (CPF) to Daewoo Engineering in July, KOGAS and INOC are targeting the first production in 2015.

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer

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