Iraq's gas deal with Royal Dutch Shell PLC (RDSA) to capture and exploit associated gas from its giant southern oil fields is expected to produce two billion cubic feet a day, according to an official agreement summary obtained by Dow Jones Newswires Tuesday.
Iraq
's gas
deal with Royal Dutch Shell PLC (RDSA) to capture and exploit associated gas
from its giant southern oil fields is expected to produce two billion cubic
feet a day, according to an official agreement summary obtained by Dow Jones
Newswires Tuesday.
The Iraqi oil ministry signed in July a final draft deal with Shell and
Japan
's
Mitsubishi Corp. (8058.TO) to develop gas production in southern
Iraq
.
However, in order to become valid the deal still needs approval from the
Baghdad
government.
The two sides disclosed few details about the agreement when they signed it in
July.
The investment required for the 25-year venture--in which
Baghdad
has
51%, Shell 44% and Mitsubishi 5%--is $17.2 billion instead of the previously
announced $12 billion, the document said.
It said some $12.8 billion would be spent on rehabilitation of existing
infrastructure and building new ones, while an additional $4.4 billion is
required for an liquefied natural gas facility to be built by Shell and
Mitsubishi.
The joint venture, called the Basra Gas Company, or BGC, initially would
deliver gas to
Iraq
's
domestic market to fuel-starved Iraqi power plants, but would then export the
extra gas after meeting local need. The planned LNG terminal would handle the
export of 600 million cubic feet a day.
Baghdad
needs to contribute $5.236
billion in the venture, some $1.524 billion of which is existing
infrastructure. While Shell and Mitsubishi need to contribute nearly $7
billion, and the remaining money will be financed through the venture's
returns, according to the summary submitted by
Iraq
's oil
ministry to the country's parliament.
Shell and Mitsubishi are also offering an optional loan of $1 billion to the
Iraqi side in the venture, it added.
The joint venture would sell produced gas to
Iraq
's
state South Gas Company, or SGC, at international standard pricing. The crude
and gas linked pricing formula in the agreement summary implies that, at Brent
price of $75 a barrel, the BGC joint venture would get $3.22 per million
British thermal units of dry gas sold to SGC.
But the SGC would have to sell the gas it buys back from the joint venture at
just $1.04/mmbtu to Iraqi power plants and industry, meaning the SGC would pay
huge subsidies, which would further increase if world's gas prices rise.
Iraq
estimates, however, it should still make around $31.1 billion over the 25 years
of the project from taxes, fees and the raw gas sales to the joint venture, the
document said.
The BGC would use Shell technology to gather and process gas from the giant
southern oil fields of Rumaila, West Qurna Phase 1 and Zubair.
Iraq
,
which has natural gas reserves totaling 112.6 trillion cubic feet, the tenth
largest in the world, produces only around 1.5 billion cubic feet a day, with
half of that amount is being flared daily, because of lack of infrastructure to
produce and market the gas.
Διαβάστε ακόμα
Τρι, 24 Σεπτεμβρίου 2024 - 19:58
Τρι, 24 Σεπτεμβρίου 2024 - 19:54
Τετ, 18 Σεπτεμβρίου 2024 - 18:32
Τετ, 18 Σεπτεμβρίου 2024 - 18:27
Τρι, 17 Σεπτεμβρίου 2024 - 20:01