Abu Dhabi: Basrah Gas Company (BGC), has doubled the amount of gas that was captured and processed from three flaring oilfields in Iraq since it started operating in 2013 and is looking for further production growth, a top executive of the company told Gulf News in an exclusive interview.
A joint venture between the government of Iraq (South Gas Company 51 per cent), Royal Dutch Shell (44 per cent) and Mitsubishi (5 per cent), BGC was set up to capture associated gas that is currently being flared from three oilfields in southern Iraq that includes Rumaila, West Qurna 1 and Zubair.
“We are currently processing over 600 million standard cubic feet of gas a day and have an ambitious target to grow well above this amount in the coming years,” said Simon Daman Willems, Managing Director of the company speaking over phone.
He said the project has been beneficial to the country in producing gas to generate electricity, Liquefied Petroleum Gas (LPG) and in protecting the environment from the damage caused by carbon dioxide and other emissions as a result of capturing the otherwise flared gas.
“Around 70 per cent of the electricity generated in Basrah province last year and 60 to 70 per cent of the all the LPG consumed in Iraq is produced from the project, in addition to a substantial amount of barrels of condensate.”
LPG production has risen to 3,300 tonnes per day in January from 2,200 in December last year, he added.
Oil price slide
However, the drop in oil prices is impacting the plans of the company. It had to temporarily put on hold a number of projects as part of its responsibility as operator, to cope with weak oil prices.
“We had a really hard look at the projects in our portfolio and these are really good solid projects but given the low oil price, we are delaying some of them until the oil price environment looks more favourable.”
It is not known how many workers were affected due to suspension of the project but the company said they had only reduced their expatriate workforce without giving the numbers. More than 5,000 Iraqis work for BGC.
As oil prices drop, a number of international oil companies are laying workers off and are cancelling their projects. Shell, which has 44 per cent share in Basrah Gas Company announced last month that it would be exiting the multibillion dollar Bab sour gas project in Abu Dhabi as low oil price hurts its income. It also announced thousands of job cuts with oil prices dropping to record low levels.
Oil majors BP and Chevron also announced plans to axe hundreds of jobs.
“We have a sound strategy in place for further development and growth, but due to current low oil price environment, we are re-evaluating with our partners to see how we can carry out that investment,” Simon said.
“We will maintain our production, we will maintain rehabilitation, rejuvenation of infrastructure and we will be looking at restarting our suspended projects as time goes on.”
On the security of the project due to conflict in Iraq, he said the safety and security of staff and assets is the number one priority and are working with government and some of the industries experienced personnel on this.
“The biggest threat for me is road safety which is accidents. We drive about 20 million kilometres a year in our operations and Iraq has one of the highest mortality rates on the road in the world. We are encouraging our staff to adopt safe driving practices.”
Iraq has estimated natural gas reserves totalling 112 trillion cubic feet, the 12th largest in the world but decades of wars and sanctions led to the deterioration of the gas infrastructure causing losses close to billions of dollars annually.
According to the US Energy Information Administration, more than half of Iraq’s gross natural gas production is vented and flared making it the fourth largest gas flaring country in the world.