Shell and Mitsubishi to Start Capturing Natural Gas from Iraqi Oil Fields

Extracting crude oil from wells around the world also releases large amounts of natural gas which, whilst a valuable source of energy in of itself, is often burned at the site of the well in a process that is known as flaring.

Iraq holds the fifth largest oil reserves in the world, and Deputy Industry Minister Mohammed Zain has stated that the country has to burn off as much as one billion cubic feet a day of natural gas due to the lack of infrastructure set up to capture and use this by-product.

In November 2011 Iraq signed a 25 year deal with Royal Dutch Shell Plc. and Mitsubishi Corp. to capture the natural gas from some of the biggest oil fields in the south of Iraq.

The $17 billion project, known as Basra Gas Co., will begin to capture some of the gas from the Zubair, Majnoon, and West Qurna-1 fields, next week. The official date of the 15th of April has been given by Ali Hussain Khudayir, the director general of South Gas Co., the government representative in the venture.

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Beginning next week the facility will produce around 400 million cubic feet a day. The plan is for production to then grow until it eventually tops out at 2 billion cubic feet a day in 2017.

Through South Gas Co. the Iraqi government controls 51% of the project, while Shell owns 44% and Mitsubishi the remaining 5%.

10 years after the invasion to topple Saddam Hussein Iraq is still unable to meet domestic energy demand, so the main priority for this new source of natural gas is to supply power stations and increase energy generation levels. Once domestic demand has been satisfied the excess gas can then be exported.

By. James Burgess of Oilprice.com