Iraq scores $360mn IFC loan to cut gas flaring
The Shell-led Basrah Gas Co (BGC) group has signed a $360mn loan agreement with the World Bank's International Finance Corp (IFC) to help it curb flaring in south Iraq and use the gas for fuel instead, the Iraqi press reported on June 29.
IFC is serving as lead arranger of the five-year loan. It is providing $137.8mn itself, while a further $180mn will come from international lenders Bank of China, Citi, Deutsche Bank, Industrial Commercial Bank of China, Natixis, Sumitomo Mitsui Banking Corporation, Societe Generale and Standard Chartered Bank. A furhter $42.2mn will come from the IFC's managed co-lending portfolio that involves institutional investors.
Iraq has significant gas reserves, some 3.5 trillion m3 proven according to BP's statistical review, but a lack of infrastructure means that around 70% of the gas that it produces is flared. This makes Iraq the biggest flarer in the world after Russia, although it vowed in 2013 to eliminate all routine flaring by 2030.
Shell has a 44% interest in BGC, while Iraq's South Gas Co has 51% and Japan's Mitsubishi has 5%. It produces around 900mn ft3/day of gas, which could be used to produce 3.4 GW of electricity for homes and industries, according to the IFC. Currently BGC only captures 60% of the available gas at the Rumaila, West Qurna 1 and Zubair oilfields.
"This pioneering project has the potential to deliver significant environmental and economic benefits, including lower GHG emissions and increased fiscal revenues, and will improve energy access and lower costs for Iraqi citizens," the IFC's vice president for the Middle East and Africa, Sergio Pimenta, commented.
While cutting flaring, Iraq also wants to boost the role of gas in its power mix to help the country overcome electricity shortages. It opened a 500-MW gas-fired power plant in April.