Basrah Gas Company (BGC) and Shamara Holding signed a contract to secure electricity supply to power Basra Natural Gas Liquid plant, to enable the plant to process by-product gas that would other wise be flared from Iraq's Rumaila, Zubair and West Qurna-1 oilfields for use by Iraq power stations.
Shamara Holding will provide the electricity required to power the Basra-NGL plant.
Once operational and connected to the country's gas grid, the plant will produce domestic gas to feed power stations and potentially generate in excess of 1,500 megawatts of electricity – enough to power more than 1 million houses in Iraq, according to Frits Klap, BGC managing director .
“The new plant will have two trains that will require around 70 megawatts of electricity to run efficiently," said Mr Frits.
Ali Shamara, chief executive of Shamara Holding Group, said the deal marked the first time in Iraq that two investment companies will jointly work together to develop the country's natural gas industry.
Iraq, Opec’s second-biggest oil producer, has a gas output of around 1 billion cubic feet per day, around 40 per cent of which is flared due to a lack of infrastructure to process the gas from its southern fields.
The BGC facility, to be built at Ar Ratawi and scheduled for completion by the end of 2020, "will add a new building block for Iraq’s energy infrastructure", said Mr Frits and will potentially bring BGC’s gas production to 1.4 billion cubic feet per day.
A February estimate by German industrial company Siemens, which is engaged in the Iraqi power sector, stated the country could save around $5.2 billion (Dh19.09bn) over the next four years by reducing gas flared from its fields.
BGC is an incorporated joint venture between majority shareholder Iraq’s South Gas Company, Shell and Mitsubishi. Currently BGC provides 70 per cent of Iraq’s LPG demand.