Page 12 - MEOG Week 39 2021

MEOG PROJECTS & COMPANIES MEOG

Basrah Gas partners

consider increasing capacity

IRAQ IRAQ’S Basrah Gas Co. (BGC) joint venture is the MoO focused on solidifying the oil sector,
considering doubling its gas processing capac- which has recently been shaken up by efforts of
ity to 2bn cubic feet (57,000mn cubic metres) IOCs to depart from long-term technical service
per day, increasing its capabilities more than contracts (TSCs).
expected as the country promotes gas utilisation. The MoO intends to raise oil output from
The JV partners – Iraq’s state-owned South 5mn barrels per day at present to 8mn bpd by
Gas Co. (SGC, 51%), Royal Dutch Shell (44%) 2027. Janabi said: “As oil production increases,
and Mitsubishi Corp. of Japan (5%) – already so will the associated gas, and that’s where the
have plans in place to increase capacity from discussions are happening with the government,
the current 1 bcf (28 mcm) per day to 1.4 bcf (40 to look at what the government’s intent and stra-
mcm) by the end of 2023. tegic vision for upstream suppliers is.”
Speaking to S&P Global Platts at last week’s He added: “That’s why we have to marry the
Gastech conference in Dubai, Shell’s country expectations of the plans on the upstream with
chairman for Iraq, Ali al-Janabi, said: “To get the investment from Basra Gas Co.”
to the 2 bcf per day is part of the discussion we Increased gas flows are key to Shell’s plans for
are having with the government at the moment. the establishment of a 1.5mn tonne per year (tpy)
Give us another six to 12 months and let’s see ethane cracker, under a project called Nebras.
what happens.” Talks between the company and the Iraqi gov-
“We are undertaking at the moment a kind ernment in this regard are still ongoing, despite a
of a review with the government on this to see memorandum of understanding (MoU) having
where the future gas supplies will come from,” been signed on the project nearly a decade ago.
he said. “There is currently enough gas capacity Janabi said: “We need to get to the next level of
to look at an expansion.” strategic intent from the government … So you
BGC runs the South Gas Utilisation Pro- need to marry up the supply side of the ethane
ject (SGUP) under a 25-year contract, treating, with when you take that investment decision as
processing and distributing associated gas from well.”
the giant Rumaila, West Qurna 1 and Zubair There have been ups and downs for the
oilfields. A final investment decision (FID) was project and multiple sources have told MEOG
taken on the multi-billion-dollar project in early that Shell’s concern about exposure to endemic
2019. corruption has been one of the key stumbling
The expansion of the SGUP comes as Iraq blocks.
continues to suffer from chronic shortages of The design plans for Nebras entail a project
electricity, having seen a drop in Iranian gas that could produce at polyethylene and various
flows which feed the country’s grid. In late June, other petrochemicals.
Electricity Minister Majed Mahdi Hantoush In January 2015, Shell released the statement
resigned amid a string of power cuts across the that Iraq’s Cabinet had authorised the Nebras
country and a full shutdown of the power grid project and that the company would work
in the south of the country. The irony is that Iraq “jointly with the ministries of oil and transport
is one of the world’s biggest flarers of associated to develop a joint investment model for a world-
gas and the country has been working to capture scale petrochemical cracker and derivative com-
more gas that is produced alongside oil. plex in the south of Iraq”.
Meanwhile, MEOG understands from Costs for the project have been quoted at as
sources within the Ministry of Oil (MoO) that much as $11bn under the wider SGUP, which
Baghdad is preparing to launch a gas-focused is estimated at $17.5bn, though Janabi said that
bid round aimed at increasing flows of free gas. A Shell has revised the costs downward, without
date has not yet been set for the bid round, with elaborating.™

P12 www. NEWSBASE .com Week 39 29•September•2021