Iraq will this week ratify a liquefied gas agreement with Shell and Mitsubishi to modernise energy facilities including a gas-to-liquid project in southern Iraq's Basra province.
The agreement covers $13 billion (Dh47.7 billion) investments spanning 25 years, with the first phase to be completed in 10 years.
According to a statement by the Iraqi Ministry of Energy, the Basra Gas Co will help increase energy production, especially for the cities in south Iraq.
This will also generate $30 billion in returns for Iraq.
Article continues below
"The project will turn Iraq into one of the leading producers of liquefied natural gas in the region," the statement said.
The project will help Iraq export liquefied natural gas to world markets. This will reduce gas imports from Iran and other countries and will help run gas turbines to provide electricity to southern parts of Iraq.
The 25-year joint venture project will utilise 7,000 metric tonnes of gas to produce 4,500 megawatts of power, the Ministry said.
"The project will help Iraq make use of more than 700 million cubic feet per day of gas which is being burnt in southern oilfields — Rumaila, Zubair and West Qurna," the Ministry statement said.
It showed that Iraq will hold 51 per cent of the project, Shell 44 per cent and Mitsubishi five per cent.
A Dubai-based gas industry expert, Thomas Curtis, told Gulf News Iraq would now benefit from the burnt gas to develop its energy sector and to join liquefied natural gas exporters.
Curtis voiced his optimism that the Iraqi government would endorse the long-awaited deal.
"This deal will help meet the rising demand for gas and manage power shortages and [Iraq] will join the key liquefied natural gas producers which will save the financial resources of the country. These will be channelled to modernising plans and development projects in Iraq."
He said Basra Gas Co was a "strong company with investments amounting to $17 billion".
He added Iraq was facing a major challenge with developing the gas sector which produces about 1.5 billion cubic feet per day out of its gas reserves which are estimated at 112 trillion cubic feet.