Iraq’s state-owned South Gas Company (SGC), Shell and Mitsubishi on 1 May announced the official start-up on operations of their long-stalled $17bn Basra Gas Company (BGC). The 25-year BGC joint venture, which will take associated gas from the southern province Rumaila, West Qurna-1 and Zubair fields, will spearhead the development of Iraq’s gas industry and is being touted as the world’s largest flare reduction project.
Given the gas production is processed in tandem with crude production, final BGC processed volumes and investment will depend ultimately on exactly what crude plateau production targets Baghdad finally decides on for Rumaila, West Qurna-1 and Zubair. These are currently being renegotiated. But Shell-led BGC gas volumes are anticipated in the region of 2bn cfd. This would require investment of $17.2bn, of which $12.8bn will be spent on the rehabilitation and expansion of gas processing facilities and $4.4bn on a planned 4mn tons/year floating LNG facility (which will consume around 600mn cfd). Even ignoring the substitution of expensive gasoil and LPG, Iraq stands to gain more than $105bn in savings (MEES, 25 June 2012). (CONTINUED - 327 WORDS)