Page 4 - DMEA Week 07 2023

DMEA COMMENTARY DMEA

Iraq’s Nebras petchem

project set for revival

Iraq’s Nebras petrochemical complex appears to have been revived again as

Baghdad looks to improve its monetisation options for its hydrocarbon riches

IRAQ IRAQ’S Ministry of Industry (MIM) revealed before accepting the more favourable $11bn
last week that the work will resume on the coun- Nebras deal. Shell mentioned that the Qatari
WHAT: Iraq says it try’s flagship petrochemicals project, Nebras, project had been axed due to plunging oil prices,
has made some progress following years of delays. which had made the scheme “commercially
on issues that had been Shell signed a deal with the Iraqi government unfeasible”.
holding up work on its over a decade ago, but news that a fresh partner A spokesman for the company said in 2015
flagship petrochemical would join the project appears to have brought that Shell had “been working with the Iraqi min-
complex. newfound momentum, with talk of the first istries of industry and minerals and jointly with
phase now expected to be complete during 2025. the ministries of oil and transport to develop a
joint investment model for a world-scale petro-
WHY: Nebras has Refinery revival chemical cracker and derivative complex in the
been in planning since On February 8, a statement from MIM to the south of Iraq.”
2012 and could generate Baghdad Times said that the 1.8mn tonne per Shell has been a major player in the South of
profits of more than $2.5bn year (tpy) project located in Basra Governate was Iraq for years, previously operating the Majnoon
per year once completed. set to be revived following previous delays. oilfield and obtaining a 44% stake in the Basra
The ministry said: “The issue of the water- Gas Co. in 2020, a company capturing associated
front for the project with a length of 1,500 metres gas from southern oilfields to produce electricity.
WHAT NEXT: has been resolved with the General Company for
It would also provide a Iraqi Ports after submitting a detailed study on Slow progress
major gas monetisation the technological requirements of the project Then Iraqi industry minister Nasser al-Esawi
outlet for Iraq, which has and agreeing with an international consultant said in 2015 that Nebras would “be one of the
struggled to reduce flaring. to present the economic model for the project largest foreign investments in Iraq and the most
This alone may prove to be and refer it to Technip and setting an appropriate important in the petrochemical sector in the
a key driver for the long- price for gas used at $1.5 per mmBtu.” Middle East.”
awaited development of He added: “The procedures for disbursing Since then, though, the project has largely
massive gas resources. financial dues to Shell International for the years been in limbo, with progress blocked by inter-
2015-2018 have been completed and the pro- nal hostilities and rifts over feedstock prices and
posed timetable for the implementation of the general fuel shortages. Its importance to Iraq
project has been prepared, as the first phase of could be massive, with modelling forecasting
the project will start in the current year 2023 and profits of around $90bn over its 35-year opera-
be completed in 2025 and a decision is issued to tional lifespan.
allocate the land for the project. The Iraqi gov- Attempts to accelerate development were
ernment [supports] this strategic project, for launched in 2020, with Oil Minister Ihsan Abdul
what it will achieve.” Jabbar leading the process, saying: “After a series
of meetings with Shell representatives over the
Shell investment past days, we agreed to accelerate measures to
A memorandum of understanding (MoU) was launch this strategic project … we decided to
signed between Shell and the Iraqi govern- sign the final contract with Shell before the end
ment in 2012 to develop Nebras, and in 2015 of this year.”
work began on the project – set to be the larg- By 2021 – the year the complex was originally
est petrochemical complex in Iraq. It will be fed supposed to be commissioned – discussions
by naphtha, creating a valuable monetisation were still ongoing, with Jabbar noting that year
opportunity for the large volumes of associated that a solution to the problems would be found
gas that continue to be flared in the south of the to allow Shell to progress with the project.
country, producing polyethylene and various He said at the time that “the main obstacle
other petrochemicals. that has blocked this project is how to calculate
Shell holds a 49% stake in Nebras, with the feedstock prices and whether Iraq should sell it
Ministry of Oil (MoO) and MIM retaining a at a price that is different from market prices”. He
combined 51%. added: “This obstacle has prompted the Industry
At the time, Shell had been engaged in a joint Minister to delay approval of the project … the
venture (JV) project in Qatar, developing the Oil Ministry will present its vision to the cabinet
$6.5bn Al-Karaana Petrochemical project with within a few weeks in order to find an adequate
Qatar Petroleum (QP), which it cancelled a day solution to this problem and start the project.”

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