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Iraq has lost billions from gas flaring
February 15, 2015
Last week I discussed the announcement of the Iraq-Shell petrochemical project in Basra and estimated to cost $11 billion (Dh40.3 billion). I surmised that the feed for the project would be ethane, methane, LPG and natural gasoline, all products of gas processing and for which Iraq needs to increase capacity sharply.
But what is the gas situation in the south of Iraq, where Shell is the major player since its famous $17.2 billion deal in November 2011 to gather and process gas from the three southern oilfields of Rumaila, West Qurna 1, and Zubair? The joint venture to establish the Basra Gas Company (BGC) was between the Iraqi South Gas Company, Shell and Mitsubishi with 51, 44 and 5 per cent stakes respectively. The initial goal was to process up to 2 billion cubic feet a day of gas.
At the time, more than 700 million cubic feet a day (mcfd) of gas was flared in the south and Shell announced that “at current prices, the gas is valued about $1.8 billion per year”.
Much was said about the deal especially with respect to the fact that it was made behind closed doors without any of the competition being called in to provide their bids. Also, Shell’s insistence to export gas as LNG was much criticised when liquid fuels were — and continue to be burnt in large quantities — in power stations.
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February 15, 2015
Last week I discussed the announcement of the Iraq-Shell petrochemical project in Basra and estimated to cost $11 billion (Dh40.3 billion). I surmised that the feed for the project would be ethane, methane, LPG and natural gasoline, all products of gas processing and for which Iraq needs to increase capacity sharply.
But what is the gas situation in the south of Iraq, where Shell is the major player since its famous $17.2 billion deal in November 2011 to gather and process gas from the three southern oilfields of Rumaila, West Qurna 1, and Zubair? The joint venture to establish the Basra Gas Company (BGC) was between the Iraqi South Gas Company, Shell and Mitsubishi with 51, 44 and 5 per cent stakes respectively. The initial goal was to process up to 2 billion cubic feet a day of gas.
At the time, more than 700 million cubic feet a day (mcfd) of gas was flared in the south and Shell announced that “at current prices, the gas is valued about $1.8 billion per year”.
Much was said about the deal especially with respect to the fact that it was made behind closed doors without any of the competition being called in to provide their bids. Also, Shell’s insistence to export gas as LNG was much criticised when liquid fuels were — and continue to be burnt in large quantities — in power stations.
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