Iraq’s LR5 Licensing Round Faces Headwinds

28 Jul 2023 Issue: 66 / 30 By: Yesar Al-Maleki

Despite the new government’s focus on gas self-sufficiency, lengthy contracting processes and fear of political intrusion by MPs are slowing down finalization of the February ratified 2018 fifth licensing round contracts by Iraq’s Oil Ministry. The planned withdrawal of China’s UEG adds further pressure on PM Mohammed al-Sudani to intervene.

It’s been five months since Iraq ratified its long-delayed 2018 fifth licensing round (LR5) contracts in February (MEES, 24 February) and despite Prime Minister Mohammed al-Sudani’s public policy of prioritizing gas development, contract activation has yet to take place. More worryingly for Baghdad, China’s UEG intends to pull out from its Sindebad block.

Iraq’s Oil Minister Hayan Abdulghani says the LR5 blocks could provide 800mn cfd of raw gas for Iraq. Six assets, three of which in southern Iraq (see map), were awarded through the licensing round to three firms – the UAE’s Crescent Petroleum, Hong Kong-listed United Energy Group (UEG) and Chinese minnow Geo-Jade, and since the February ratification, Baghdad has launched a further two gas-focused rounds in which it is offering another two dozen blocks (MEES, 23 June) – including those which went unawarded in LR5. (CONTINUED - 925 WORDS)