Hurdles remain in Iraq's Akkas gas future

BAGHDAD, Jan. 11 (UPI) -- Legal and logistical questions remain for Iraq, despite talks with Shell and Total to develop the Akkas field, which may feed gas to both Syria and Europe.

The Akkas gas field in Anbar province contains up to 7 trillion cubic feet of natural gas, located in an area until recently most known for al-Qaida's presence. Iraq's total proven reserves are 112 trillion cubic feet.

Development talks are also possible because security has improved. Anbar province was a stronghold of the Sunni insurgency and linked to al-Qaida. But a refocused U.S. military effort to join forces with Iraqi Sunnis against al-Qaida has improved security.

The risk, however, remains. The Shiite-led government opposes arming the Sunnis and the Sunnis feel excluded from the government, setting the stage for a potentially new front of the civil conflict in the country.

The Times reports both Shell and Total are in the running for a deal, as are other companies the Iraqi government met with last week.

The government has yet to approve a new national hydrocarbons law governing investment and control over the sector. Oil Minister Hussain al-Shahristani has said he'll rely on the Saddam-era law to guide upcoming deal making until a new law is approved.

This brings into question whether Iraq will make a move away from a long-held nationalized energy sector and the extent international oil firms will be allowed in. It has been a major issue in the debate over the oil law.

Iraq may contract for services companies as a partner instead of bringing in a major oil company to do the work, The Times reports.

The country has huge gas deposits, a large need for the gas to feed its power sector, but is likely to opt for enhancing the federal income by exporting to Syria and Europe.

Syria will need to make good on commitments to step up security along the border and stem the flow of insurgents, as Iraq has asked them to do previously in talks to restart an oil pipeline.

The field's development is slated to begin sending 50 million cubic feet of natural gas per day to Syria, possibly increasing it to 450 million cubic feet daily and providing another source of gas for Europe, which is looking to diversify from current Russian reliance.