Tue Jul 12, 2011 2:2PMIraq Inks Deal To Capture Gas at Oil Fields
Iraq has signed a USD12 billion draft agreement with Royal Dutch Shell and Mitsubishi oil companies to capture gas at the Middle Eastern country's southern oil fields.
Iraq's oil ministry said in a statement that the final draft agreement was signed on Tuesday, adding that the deal still needs the approval of the cabinet, Reuters reported.
The new draft deal, the Basra Gas Co-joint venture, would be one of Iraq's high-priority plans to modernize its energy facilities and boost oil exports.
The Iraqi government will hold 51 percent of the venture, while 44 percent of it will be held by Shell and the rest by Mitsubishi.
“The execution of the deal will open the competition door for Iraq to export liquefied natural gas (LNG) to the international market,” said Ali al-Khudhier, head of the state-run South Gas Co.
Iraq has been experiencing power blackouts frequently for years and will probably encounter more electricity shortage in the future unless gas from the oilfields is captured and fed to new power plants.
Using gas in power plants is central to Iraq's plan to boost electricity production to keep up with the demand rate which is twice the rate of supply.
Iraq is losing one billion cubic feet per day of gas through flaring, and the venture would help the oil ministry capture more than 700 million cubic feet per day of the gas being burnt off at three southern oilfields of Rumaila, Zubair and West Qurna Phase One.
Iraqi officials say the initial plan for the 25-year development joint venture includes setting up an LNG gas project at a later stage to export any excess gas with a maximum capacity of 600 million cubic feet per day.
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