Home Oil and Gas $17 billion Shell & Mitsubishi gas flare recovery in Iraq

$17 billion Shell & Mitsubishi gas flare recovery in Iraq

The Iraq Government has provided permission to its nod to the natural gas exploration agreement signed between the Netherlands and Japan’s Mitsubishi Corporation (Mitsubishi).

The project, which demands the capital expenditure of approximately $17.2 billion, was initially signed in 2008.

The joint venture, Basra Gas Company (BGC) has state-controlled by shared interests:

  • South Gas Company (SGC) 51%
  • Shell 44%
  • Mitsubishi 5%
  • The $17.2 billion capital expenditure gas flare recovery project

The $17.2 billion capital expenditure gas flare recovery project comprises two main packages:

  • $12.8 billion for oil belt upgrading and flared gas gathering
  • $ 3 billion for a Floating LPG plant and Terminal to be paired offshore the Basra coast

The first package will target to upgrade and innovate infrastructural facilities of the oil fields at a cost of a certain $12.8 billion, thereby raising output.

This 25-year deal comprise will work closely to capture more than 700 million cf/d of natural gas from three of the most productive southern acreages namely Rumaila, Zubair and West Qurna Phase 1.

On the second package Shell and Mitsubishi will also set up a liquefied natural gas facility, with a maximum capacity of 600 million cf/d natural gas.

The liquefied natural gas (LNG) plant should cost around $3 billion in capital expenditure and is required to be completed in 2017.

Under the present story, a large volume of natural gas, estimated at $1.8 billion per annum, is being flared due to the deficiency of a proper gas processing plant.

Thus, the project will also comprise intensify and LPG facilities to treat the associated gas.

Shell assigned first orders to GE and ABB
Shell is holding the first measures to implement the project:

  • Shell issued the first order for a GE turbo generator for the new Khour al-Zubair NGL plant to host an associated power generation plant.
  • Shell has signed a $63 million contract with ABB Italy to construct this 50MW power plant in Basra in the Khour al-Zubair zone scheduled for completion in 2013.
  • The resettlement of the 18MW power generator at North Rumaila gas plant.
  • The refurbishment of the K03 compressor, fragile for the export of 35 mmscfd at the Khour al-Zubair (KAZ) plant
  • The refurbishment of the propane-cooling compressor at the North Rumaila Natural gas liquids (NGL) plant.
  • Review of the propane-cooling circuit to grow-up LPG recovery.
  • Repair of intensifying pumps (to allow the recovery of intensifying that are currently flared).

With this joint venture (JV) between South Gas Company, Shell and Mitsubishi, the Iraqi authority goal to boost home natural gas production as well as utilize the product to satisfy the rapidly growing requirement for electricity within the country, with any extra amount to be exported.

The volume of additional natural gas is enough to produce 4500MW (equivalent to 70% of the producing capacity of the current Iraqi).

It can generate 4000 t/y of liquefied natural gas (equivalent to 320,000 cylinders of cooking gas Liquid natural gas (LNG) per day), and 770 tons per day of condensates (enough to fuel 75,000 cars).

In addition, if the natural gas was consumed, instead of actually flared, to change fuel oil for power generation in Iraq, that would reduce carbon dioxide (CO2) falling by 20 million tons annually.

Shell will expand technological know-how and Project Management Consultancy support to this project.

The company has a long-standing consociation with Iraq that targets to developing the country’s energy sector.

provincial content requirements for the flared gas recovery
The South Gas Company, Shell and Mitsubishi are committed to contributing to the sustainable development of the territory of Basrah and Iraq more generally.

The development and use of local companies is the key activity by which the Basrah Gas Company venture can contribute meaningfully to local financial development.

Local content for Basrah Gas Company instrument utilization of Iraqi manpower, materials, and equipment manufactured and compiled in Iraq as well as services.

For all the general contracts, above $2 million assigned by Basrah Gas Company, the contractor will be expected to provide the following with respect with local content:

  • Former experience in working with and developing local companies
  • Prior to the commencement of activities a local content plan
  • Periodic reports outlining the use of local content including man-hours, materials, equipment, and services following a format that would be agreed between the contractor and Basrah Gas Company
  • After a few years of the situation still, the South Gas Company, Shell and Mitsubishi are moving further on some critical phases of this Basra gas flare recovery project with first orders being established to GE and ABB. in expecting 2,000 million cf natural gas generate in 2013 and completion in 2017.

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