Abu Dhabi

South Gas Company, Shell and Mitsubishi have officially announced the commencement of operations of Basrah Gas Company (BGC), which will be the largest gas project in Iraq’s history and the world’s largest flares reduction project, global energy major Royal Dutch Shell said last week.

Basrah Gas Company is a 25-year incorporated joint venture between Iraq’s South Gas Company holding 51 per cent of its shares, Shell 44 per cent and Mitsubishi Corporation 5 per cent. The joint venture captures associated gas that is currently being flared from three oil fields in southern Iraq – Rumaila, West Qurna 1 and Zubair.

Iraq has estimated natural gas reserves totalling 112.6 trillion cubic feet, the 10th largest in the world. However, due to decades of wars and sanctions that led to the deterioration of the gas infrastructure, preliminary estimates indicate that Iraq’s losses from gas flaring could amount to billions of dollars annually.

Under the agreement signed with the Iraqi Ministry of Oil, BGC will sell processed gas to state-owned South Gas Company.

“BGC will be dedicated to the rehabilitation and upgrade of the current facilities to put them back to work safely as well as building new assets which is expected to increase the production capacity from a current 400 million cubic feet per day to 2 billion cubic feet per day,” Shell said.

Iraq’s total oil production was 3.1 million barrels per day (bpd) in April. The country’s targeting 3.4 million bpd output next year.

According to the latest oil industry estimates, Iraq’s proven reserves are in the order of 143 billion barrels, the third largest in the world. Proven reserves are found in 79 fields (70 oil and 9 gas), of which only 23 are producing. Its current proven gas reserves are estimated at 128 trillion cubic feet (tcf) with the probable gas reserves estimated at 325 tcf.