Iraq Cabinet Approves $17 Billion Gas Contract with Shell, Mitsubishi
Iraq’s cabinet on Tuesday approved a deal signed in July by the Iraqi oil ministry with Royal Dutch Shell and Japan's Mitsubishi Corp to develop gas production in southern Iraq.
Iraq's Southern Gas Company deal with Shell and Mitsubishi to capture and exploit associated gas from three oil fields in the south of the country is expected to produce two billion cubic feet of gas a day.
The investment required for the 25-year venture--in which Baghdad has 51%, Shell 44% and Mitsubishi 5%--is $17.2 billion.
The joint venture, called the Basra Gas Company, or BGC, initially would deliver gas to Iraq's domestic market to fuel-starved Iraqi power plants, but would then export the extra gas after meeting local need. A planned LNG terminal would handle the export of 600 million cubic feet per day.
Iraq, holder of the fifth-biggest gas reserves in the Middle East, is struggling to restore power capacity after years of conflict and economic sanctions.
Iraq burns off more gas as a percentage of output than any other country, losing $5 million a day, according to Fabrice Mosneron Dupin, an adviser at the Sustainable Energy, Oil, Gas and Mining Division of the World Bank-led Global Gas Flaring Reduction program..