UAE firms Dana Gas and Crescent Oil are looking to build a gas city in Iraqs western province of Anbar that they hope would draw $60 billion in investment, said province Governor Qassim Al-Fahdawi.
The gas could come from the provinces Akkas gas field, which Al-Fahdawi said Dana and Crescent were also keen to develop with the central Oil Ministry.
The plan would use gas Baghdad has previously identified for possible export to the Nabucco pipeline or for export to Syria in order to feed power generation plants as well as petrochemical and fertilizer factories, the governor said.
Europe-sponsored and US-supported Nabucco is envisaged to carry Russian gas to Europe via the Black Sea to bypass transit countries, including Ukraine.
Fahdawi said Dana and Crescent had estimated an investment of $8 billion for the development of the Akkas Field and added a South Korean firm had also put in an offer to develop the city.
Al-Fahdawi was in Istanbul last week to meet potential investors over the 2.1 trillion cubic metre reserve Akkas Field and the gas city model.
A Crescent spokesman said the company had submitted a formal proposal for the project, which it said it had been discussing with the province.
Dana and Crescent, which have contracts with the regional Kurdish government in northern Iraq (KRG), may have difficulty getting the nod for the project from Baghdad. The oil ministry deems deals done by the largely autonomous Kurdish region with foreign firms as illegal.
Iraqi Prime Minister Nuri Al-Maliki has said Iraq could supply some 15 billion cubic metres of gas through the Nabucco Pipeline to Europe.
Al-Fahdawi said he would rather see the gas used to boost the local economy in Anbar. When asked if Akkas gas could be used for the Nabucco pipeline, Al-Fahdawi said: "We would veto it. It will not be done, we are ready to export power if that is necessary."
Anbar has seen some of the heaviest violence since the US led invasion of Iraq and its aftermath, and Al-Fahdawi said he wants to bring industry to the region for the sake of stability and employment.
Akkas and Mansuriyah, another gas field in Diyala province, failed to secure developers in Iraqs June auction of oil and gas contracts.
The government then decided that the National Oil Company -- whose foundation depends on the passage through parliament of Iraqs long-delayed hydrocarbon laws -- would take the lead in developing the gas fields instead.
Oil Ministry spokesman Asim Jihad said he could not confirm whether Dana and Crescent had submitted proposals to develop Akkas, but said the door was open for foreign firms to assist Iraqi state companies.
"The national companies will develop Akkas, but as you know, gas production is very complex, and there must be the support of international firms ... to develop this field. The national companies cant do it alone, there must be cooperation with international firms to extract and export gas."
Dana and Crescent are involved in another initiative in the Kurdish region that could supply Nabucco. The two companies have teamed up with Austrias OMV and Hungarys MOL to supply gas both locally and to Nabucco from fields in the Kurdish region operated by the UAE firms.
The UAE firms are also building a gas city in the Kurdish region, and plan other similar projects in Egypt and Yemen.
The concept model for the cities is that the UAE firms and partners develop the infrastructure for energy intensive industries that could be fed by gas, for example steel, cement and petrochemicals.
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