November 28, 2011
Mitsubishi Corporation Signs Agreement for Natural Gas Joint Venture with Iraq and Shell
The Iraqi Ministry of Oil (MoO) formally signed a joint venture agreement with Shell, the South Gas Company (SGC), an affiliate of MoO, and Mitsubishi Corporation (MC) on an initiative to capture associated gas in South Iraq.
MC made an agreement with Shell to take a 5% interest in the project in August 2009. Following the Iraq government approval made on 15th November this year, SGC, Shell and MC have signed agreements associated with the project. These agreements create the Basrah Gas Company (BGC) Joint Venture, made up of Iraq's SGC (51%), Shell (44%) and MC (5%).
Some 700 million standard cubic feet per day of natural gas (5 million tonnes per year), which is produced by upstream suppliers in association with oil, is currently flared every day in southern Iraq because of a lack of infrastructure to collect it.
It will collect raw gas from the Rumaila, Zubair and West Qurna 1 fields in southern Iraq, and process that gas into valuable products, such as natural gas, condensate and liquefied petroleum gas (LPG), initially for sale domestically in Iraq. By capturing and processing this natural gas, BGC aims to create an important and reliable supply of domestic energy, reduce unnecessary greenhouse gas emissions and create significant value for Iraq.
In the future, once the local demands are met, and previous approval by the Iraqi authorities, BGC could develop a liquefied natural gas (LNG) facility to also export natural gas to create a new benefit for Iraq's economy and contribute stable energy supply to mainly Japan.
BGC will promote feasibility study and aim to start operation from 2013 (2 billion standard cubit feet per day of natural gas at maximum). As a new partner in BGC, MC brings knowledge of the existing South Gas Company facilities and complementary technical and commercial capabilities in order to enhance the value of the project.
Tetsuro Kuwabara, Mitsubishi Corporation's Senior Vice President, said "Mitsubishi has been doing business in Iraq for over 50 years and are honored to be able to participate in this large-scale energy Joint Venture with Iraqi Ministry of Oil and South Gas Company. We aim to contribute to the country through the project and hope to further enhance the relationship between Republic of Iraq and Mitsubishi. We have had a long and close alliance with Shell for over 40 years in the global energy sector and are delighted to be the strategic partner in this project. We have a strong support from the Japanese Government and government financial institutions such as Nippon Export Investment Insurance."
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