Jump menu

Main content |  back to top

News and Media Releases

Iraq launches a major step in energy supply and the world’s largest flare reduction project

South Gas Company, Shell and Mitsubishi today officially announced the commencement of operations of Basrah Gas Company, which will be the largest gas project in Iraq’s history and the world’s largest flares reduction project.

Basrah Gas Company is a 25-year incorporated Joint Venture between Iraq’s South Gas Company holding 51% of its shares, Shell 44% and Mitsubishi Corporation 5%. The Joint Venture captures associated gas that is currently being flared from three oil fields in southern Iraq – Rumaila, West Qurna 1 and Zubair.

Iraq has estimated natural gas reserves totaling 112.6 trillion cubic feet, the 10th largest in the world. However, due to decades of wars and sanctions that led to the deterioration of the gas infrastructure, preliminary estimates indicate that Iraq’s losses from gas flaring could amount to billions of dollars annually*.

Mr. Ali Khudair, South Gas Company Director General said: “Basrah produces only around 1 billion cubic feet a day of associated gas and some 700 million cubic feet are being flared, which is wasting millions of dollars of the country’s resources every day. Partnering with world class companies like Shell and Mitsubishi will help Iraq fulfil its goal of developing its gas infrastructure to eliminate flaring and provide fuel to the Iraqi industry, power generation as well as income to the state.”

Under the agreement signed with the Iraqi Ministry of Oil, BGC will sell processed gas to state-owned South Gas Company. BGC will be dedicated to the rehabilitation and upgrade of the current facilities to put them back to work safely as well as building new assets which is expected to increase the production capacity from a current 400 million cubic feet per day to 2 billion cubic feet per day. Since the agreements were signed at the end of November 2011, SGC and Shell have increased production capacity from ca 240 million scf/d to around 400million scf/d of gas throughput, initiated a number of safety training activities to raise awareness and safety standards at operations with more than 8,500 training courses completed. Lastly, a number of critical projects have already started, like the new power plant at the Khor Al Zubair (KAZ) gas plant, compressor stations in North Rumaila, as well as leasing compressors to reduce gas flaring in the Zubair field.

In the future, the project also includes the option to build an LNG plant for potential export once domestic energy needs are met, which will create a new income stream and help the country increase the pace of its economic growth.

“The birth of this JV is a clear testament to the determination of the Iraqi Government to develop the country’s energy sector and a true reflection to the significant improvement in the security situation that is stimulating investments in Basrah.” said Basrah Gas Company Managing Director, Mr. Gasser Hanter. “Our main priority is to harness Iraq’s wasted gas resources and provide its people with much-needed reliable and clean energy, whilst helping to reduce the environmental impact caused by the flared gas in Basrah”

BGC is expected to create significant value for Iraq and help improve the local economy through providing a reliable and clean gas supply for power generation, thereby considerably reducing gas flaring. This in turn will help enhancing Basrah’s air quality, building the local staff capabilities to international standards and hiring local suppliers.

Mr. Hans Nijkamp, Shell Iraq Chairman said: “I am very pleased to see this project becoming a reality. Shell is committed to provide BGC with technology, funding, international best practices, and experienced personnel who can help build the required capabilities across the organization which compliments SGC’s long experience on the ground in Iraq, resulting in increased energy supply to the Iraqi people”.

* According to the World Bank’s Global Gas Flaring Reduction Partnership

Enquiries:

Shell Media Relations

International +44 207 934 5550

Middle East & North Africa +971 470 55347

Shell Investor Relations

International +31 70 377 4540

North America +1 713 241 1042

Cautionary note

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this release “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this release refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this release, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest. 

This release contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this release, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this release are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended 31 December, 2012 (available at www.shell.com/investor and www.sec.gov). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this release, 01 May 2013. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this release. There can be no assurance that dividend payments will match or exceed those set out in this release in the future, or that they will be made at all.

We use certain terms in this release, such as resources, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

Page Tools