Iraq Seeks Foreign Partner For Second Gas Plant

Iraq Seeks Foreign Partner For Second Gas Plant

 Iraq is looking for foreign partners to build and operate a second venture to process gas released as a by-product of oil production in its southern fields, state-run South Gas Company said.

The new venture will collect gas currently being flared because of a lack of processing capacity, South Gas Co. Director General Ihsan Abdul Jabbar told Reuters in Basra, southern Iraq.

"Targeted partners are international partners who have the know-how and the knowledge to run such projects. Gas fields outside Basra entail two challenges: namely financial and technical challenges. Negotiations are currently on with the companies that have solutions to the technical challenges, what I mean by that are those who have installations capable of dealing with the quantities of gas, which will be mostly acid gas that costs a lot to utilize. This is the technical challenge, whereas the financial challenge is the government's ability to allocate needed funds," Abdul Jabbar said in an interview on January 28.

To promote competition, the new partners cannot be Shell or Mitsubishi, as the two are part of Basrah Gas Co., the first gas processing venture which came on-stream in 2013, in partnership with South Gas Co., Abdul Jabbar said.

About 600 million cubic feet (17 million cubic meters) a day of gas are currently being flared from the southern fields and 700 million cubic feet per day processed, said Abdul Jabbar, who is also the chairman of Basrah Gas Company.

Basrah Gas hopes to increase the volume of gas processed to over 900 million cubic feet a day by the end of the year, from 700,000 million cubic feet per day at the end of 2016, Abdul Jabbar said. The gas processed is fed into the local grid and some of it exported as liquefied petroleum gas (LPG) and condensates.

This year Iraq expects to almost triple the revenue of LPG and condensate exports, he added.

"We expect revenues to almost triple in 2017, We expect Basra Gas company to exceed $200 million, which represents part of the production of Basra Gas Company as the major part is locally consumed," explained Abdul Jabbar.

"These revenues are only for exported quantities. Revenues of selling dry gas and LPG produced by Basra Gas Company inside the country were more than $600 million in 2016 and I think that they will be increased in 2017 to $700 million," he added.

Iraq has some of the world's largest oil reserves but most of its gas is a by-product of crude oil production. It is it scheduled to bring on-stream its first dedicated natural gas field, Siba, in mid-2017.