02-05-2013

Mitsubishi Corporation JV Starts natural gas operations in Iraq

Mitsubishi Corporation (MC) is pleased to announce that Basra Gas Company (BGC), a joint venture established by MC, Royal Dutch Shell plc (Shell) and Iraq’s state-run South Gas Company (SGC) for the development of an associated gas utilization project in southern Iraq, has started commercial operations. BGC will implement the project, which entails gas collection and processing.
 
BGC will collect raw gas from the Rumaila, Zubair and West Qurna Phase 1 oil fields in southern Iraq. The gas will be processed to produce natural gas, condensate and liquefied petroleum gas (LPG). Based on initial upgrading undertaken in keeping with the feasibility study, SGC and with the support of Shell and MC managed to increase the processing capacity of the current assets by 150 million cubic feet per day to more than 400 million cubic feet per day. Investments are currently being made with the aim of increasing capacity at the facility to some 2 billion cubic feet per day.
 
BGC will commercialize the large amounts of gas flared every day in southern Iraq for supply to the domestic market and, in so doing, play an important role in providing a stable supply of energy to Iraq. The development of this commercial activity will also help to stimulate economic development in Iraq. Once domestic demand in Iraq is met, and pending the relevant permits from the Iraqi government, the project will seek to concretize plans for the export of condensate and liquid petroleum gas (LPG) and subsequently the export of liquefied natural gas (LNG).
 
According to the International Energy Agency (IEA), Iraq is projected to significantly increase oil production by 2035, which will account for 45% of the world’s projected incremental oil production.  In order to meet this projection, the processing of oil associated gas must remain stable. The project will therefore draw much attention for what is expected of its role in ensuring the stability of oil associated gas production in southern Iraq.
 
Technical and commercial expertise provided by MC will complement BGC’s capacity and raise its corporate value. In the long-term, MC will also aim to contribute a stable supply of energy for the Japanese market. Last October, MC set up the Southern Iraq Office in Basra so that the company can gain a better understanding of local needs, not only as it relates to this project, but also with a view to developing other projects in the field of energy and projects in infrastructure development such as power generation, as well as businesses in the commodities sector. Through its business activities, MC hopes to make a valuable contribution to economic development in Iraq.