A Chinese energy company was awarded a contract to recover natural gas from Iraq's Halfaya oil field, on Wednesday, to fuel power stations in the country's underserved Maysan province.
The China Petroleum Engineering and Construction Corporation said its gas processing plant would be able to recover and refine 300 million standard cubic feet of gas daily.
For decades, Iraqi oilfields have burned off the hydrocarbon byproducts of crude oil drilling instead of capturing them for energy production. Now, Iraq says it wants to recover natural gas to generate electricity and address the power shortages that plague the country.
The push into gas recovery comes amid diplomatic pressure by the United States to have Iraq halt its gas and electricity imports from Iran. The U.S. applied sanctions against Iran's energy and financial sectors last year.
The Halfaya oilfield is operated by PetroChina. CPECC says its gas plant will be operational in 30 months. Representatives from CPECC, PetroChina, and the Ministry of Oil signed an agreement in Baghdad on Wednesday.
Iraq produces approximately 1 billion cubic feet of gas daily, according to the U.S. Energy Information Administration. The country is planning, or has already initiated, projects to recover another 1.85 billion cubic feet of gas daily, said Oil Minister Thamer Ghadhban on Wednesday.