Iraq is in talks to possibly export surplus natural gas through the Arab Gas Pipeline to the Middle East and Europe, its oil minister said yesterday.

“We are in talks to connect the Iraqi surplus to this pipeline to export it to Arab states and then to Europe,” Hussain Al Shahristani said, referring to a pipeline now linking Egypt to Syria but that may later connect to Europe.

Shahristani spoke during a news conference with Egyptian Oil Minister Sameh Fahmy, who was making a visit to Baghdad.

“Iraq is in the process of building many gas (processing) stations,” Shahristani said. “The surplus will be exported.”

Iraq has the world’s third-largest oil reserves and the tenth-largest gas reserves, but it needs billions of dollars in investment to repair years of sanctions and war. Oil production stands below what it was before the US-led invasion to topple Saddam Hussein in 2003, and the oil ministry is under increasing pressure to boost output and help overcome a budget crunch caused by a slump in oil prices.

Iraq exports a small amount of natural gas to Syria from its Akkas field in western Anbar province, but it hopes that situation will change once it signs major contracts it is seeking with the world’s top energy firms.

Leveraging Iraq’s vast energy reserves has been difficult during years of violence and political turmoil. The oil ministry is locked in a feud with semi-autonomous Kurdistan, the northern region ruled by minority Kurds. This week, Kurdish officials heralded a new $ 8 billion plan from foreign energy firms that could supply natural gas from Kurdistan to Europe via the Nabucco pipeline.

Shahristani has rejected the deal because it was done without participation from the oil ministry.