* Heavy expenditure planned for Iraq this year and next
* Output from Siba, Mansuriyah gas fields on track for 2014
* Eyes more Iraq gas, possible Libyan investment
By Peg Mackey
LONDON, Feb 11 Kuwait Energy says it is firmly
fixed on pumping gas and finding oil in southern Iraq and will
not risk aggravating Baghdad by seeking contentious deals with
the northern autonomous region of Kurdistan.
Sara Akbar, chief executive of Kuwait Energy, says strong
ties with Baghdad are core to its strategic investment in
"It's very simple. From the beginning, our ambition was to
be able to develop gas in Iraq and to export some of that gas to
Kuwait," she said in an interview.
Oil majors Exxon Mobil and Total, at work
on giant projects in the south, have upset the central
government by signing exploration contracts with the Kurdistan
Regional Government (KRG) - deals Baghdad regards as illegal.
The contracts have increased tension between the central
government and the Kurds in a long-running dispute over oil,
territory and political autonomy.
The export of Iraq's gas is still sensitive because, nearly
a decade after the U.S.-led invasion, Baghdad still can supply
only a few hours of power each day.
"The time is not right now (for exporting gas to Kuwait),
because Iraq needs gas for itself," Akbar said.
"In the future, we hope to be able to do so. And for that,
we need our relationship to strengthen and develop with Baghdad.
And that will achieve our objective rather than working against
them and being in Kurdistan."
OPEC member Iraq is expected to be the world's biggest
source of new energy supplies over the next few years. It plans
to open up more rounds of auctions for oil and gas blocks.
And Akbar said Kuwait Energy, which already has an oil
exploration block, will go after more rights to look for gas.
Iraq played a fleeting role as gas exporter to Kuwait from
the mid-1980s until it invaded its neighbour in 1990. The
retreating Iraqi army set fire to Kuwaiti oil wells, and Akbar,
a petroleum engineer, joined the firefighting squads to put out
More than two decades on, the two countries are moving to
deepen ties across the energy sector. Kuwait Energy made a big
push during Iraq's third licensing round in 2010, banding
together with Turkish state-owned oil company TPAO to win a
contract to develop the southern Siba gas field, near the
It also secured a stake in a gas field project at Mansuriyah
in the restive Diyala province near Iran, where TPAO is
For its part, Iraq hopes eventually to restart exports to
Kuwait, which is now buying gas from multinationals, and the
non-associated Siba gas field in Basra province could provide a
"From an economic point of view, it's a very logical project
that will tie the two countries together," said Akbar, who spent
a decade working in the oilfields of Kuwait.
Production from Siba and Mansuriyah is on track to start up
in the first half of 2014. The company plans "heavy expenditure
for Iraq this year and next", she said.
About $400 million will be spent over the next two years to
drill wells and build pipelines and surface facilities at the
A further $125 million is targeted for fast track
exploration at Block 9, which Kuwait Energy snared in last
year's fourth licensing round. Dragon Oil PLC is its
minority partner in the promising southern oil block, which
straddles the border with Iran.
As Iraq's diplomatic ties soured with Turkey, it asked
Kuwait Energy to acquire the shares in Block 9 from TPAO, which
the cabinet decided to expel.
Baghdad has been angered by Ankara's moves to forge closer
ties with the KRG, including serving as an outlet for Kurdish
The KRG offers foreign investors production-sharing deals
that allow them to profit jointly from output. Iraq has offered
less attractive service contracts in which companies are paid a
Akbar said she did not expect Baghdad to force TPAO out of
fields such as Mansuriyah and Siba where it's already at work.
"I don't think the existing projects will be affected," she
said. "We hope for things to work out between the two parties
and for TPAO to be able to come back to the block and expand
their operations in Iraq."
Just seven years old, home-grown Kuwait Energy, based in
Kuwait City, has already established a presence in the Middle
East and North Africa.
Its core producing assets are in Egypt, while it has
exploration blocks in Yemen that show potential and has taken
new blocks in Afghanistan with TPAO, Dragon Oil and the Afghan
"We are from the region. We know how to navigate our way
through the uncertainty and the risky times," Akbar said.
The path may yet lead Kuwait Energy to Libya.
"We decided to go there and establish ourselves, develop
relationships, study the fields and do whatever is necessary so
when the country is ready - we are ready as well," the chief