Basrah Gas Moves A Step Closer to Realization

Royal Dutch Shell has received approval from Iraq’s South Gas Company, the country’s state-owned gas company, to proceed with a joint venture to collect and process raw gas presently being flared from southern oilfields.

The joint venture plans to collect gas from Iraq’s southern Rumaila, Zubair and West Qurna 1 oilfields, processing it into natural gas for domestic consumption and later for export. Shell has estimated some 700m square cubic feet of gas is flared every day in southern Iraq.

“The execution of the deal will open the competition door for Iraq to export liquefied gas to the international market,” Ali al-Khudhier, head of The South Gas Company, said in a statement, according to Reuters.

The Basrah Gas Company joint-venture is held 44 per cent by Shell, 5 per cent by Mitsubishi Corporation, and a 51 per cent stake by South Gas Company. The South Gas Company  was established in July 1998 in the Governorate of Basra and is wholly owned by the Iraqi Ministry of Oil.

The project was first signed in 2008 but has since faced legal disputes, some political opposition and renegotiations on gas pricing. The project, valued in excess of $12 billion, still requires Iraqi cabinet approval.