Saipem won FEED for Basra Gas LNG Export Terminal
Basra Gas Company (BGC), the joint venture between the local South Gas Company (South Gas), Royal Dutch Shell (Shell) from The Netherlands and Mitsubishi Corporation (Mitsubishi) from Japan, awarded the front end engineering and design (FEED) contract to the Italian engineering company, Saipem for the construction of the first liquefied natural gas (LNG) export terminal to be located in the south of Iraq.
In May 2013, Iraq Government finally approved the creation of BGC joint venture to support the world largest program to reduce flared gas.
Iraq counts the 10th largest reserves of conventional gas in the world.
From historical reasons, all the gas produced in Iraq is associated to the crude oil production and because of the lack of infrastructures after the two consecutive wars, a significant part of this associated gas is just flared as to facilitate the vital crude oil production.
Only the Basra region is producing 1 billion cubic feet per day (cf/d) of associated gas out of which 70% are just flared.
The consequences of such quantities of flared gas on the environment and the Iraq economy is no longer affordable while this country is currently importing liquefied petroleum gas (LPG).
With a $17 billion capital expenditure program initiated in 2012, South Gas, Shell and Mitsubishi have launched series of projects to revamp existing infrastructures, gather the associated gas flared in oil production fields.
Shell and South Gas to export LNG to stop flaring gas
In priority BGC is targeting three giant fields in the south of Iraq, Rumaila, West Qurna-1 and Zubair.
These fields on their own generate 700 million cf/d of gas being flared.
Of course the Iraq Authorities intend to give priority to the local market in order to develop the local economy through power generation and petrochemical industries.
But these downstream activities may take time to be developed as depending on number of other parameters than just capital expenditure.
Therefore the export of any available gas through an LNG terminal would provide Iraq with net resources while its saves gas flaring practices in the meantime the downstream sector should be ramped up.
In this context, Shell, Mitsubishi and South Gas are moving ahead through their joint venture Basra Gas in awarding the FEED contract to Saipem for this first Iraq LNG plant in order BGC to stop flaring associated gas in the Basra region by 2017.