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The Financial Times has proclaimed that the opening of a new $17 billion natural gas project run by Royal Dutch Shell could prove to be a ‘milestone’ in the country’s post-war recovery.
Despite this promising news Iraq’s oil industry in general has seen a major decrease in interest from a number of international oil majors, as the coalition government led by Prime Minister Nouri al-Maliki struggles to stamp any authority on the country amidst sectarian bloodshed, the conflict with the independent Kurds in the north, political corruption, and spill-over from the Syrian civil war.
Guy Chazan, from the Financial Times, explained that Iraq “was once the hottest ticket in global energy, but the widely predicted bonanza for Western oil companies in post-war Iraq has failed to materialize.
Political instability, poor contractual terms and infrastructure bottlenecks have sharply reduced the country's appeal;” and a complete lack of interest from all big oil companies in the May 2012 licensing auction “epitomises a general disenchantment with Iraq's oil sector.”
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However Chazan is one of the many who believe that Shells new gas project could herald a turning point for the country’s fragile economy.
The joint venture facility located in Basra is controlled by Shell, with a 44% stake, the state-owned South Gas CO. with 51%, and Japan’s Mitsubishi Corp, which has the remaining 5%.
Natural gas is produced as a by-product of oil wells in the country’s giant fields, but due to a lack of infrastructure to collect it and transport it, around $2 billion a year is burnt off at the source in huge flares. This new project allows the natural gas released from wells in the Rumulia, West Qurna 1, and Zubair fields to be collected and processed
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com