Following the agreement made between a wholly-owned affiliate of Royal Dutch Shell plc and Mitsubishi Corporation ("MC"), MC has accepted an invitation letter issued by the Iraqi Ministry of Oil ("MoO") and Shell to take a 5% interest in the proposed South Gas Utilization Project Joint Venture ("JV") currently under development by the MoO and Shell.
As a new partner in the proposed JV, MC brings knowledge of the existing South Gas Company facilities and complementary technical and commercial capabilities in order to enhance the value of the project.
In September 2008, MoO and Shell signed a Heads of Agreement that sets out the commercial principles to establish the joint venture with the Iraqi South Gas Company, an affiliate of MoO.
Once established, the JV will gather, treat and process raw gas produced in Basra and sell the processed natural gas and associated products such as condensate and Liquefied Petroleum Gas (LPG) for use in the domestic and export markets. In the future, the JV could develop a liquefied natural gas (LNG) facility to also export natural gas to create a new benefit for Iraq's economy.
Some 700 million standard cubic feet per day of natural gas, which is produced by upstream suppliers in association with oil, is currently flared every day in southern Iraq. By capturing and processing this natural gas, the JV aims to create an important and reliable supply of domestic energy, reduce unnecessary greenhouse gas emissions and create significant value for Iraq.
The proposed JV structure is the model chosen by the Ministry of Oil as the vehicle to create a world-class natural gas industry in Iraq.
"We have a long and close relationship with Shell for over 40 years in the global energy sector and are delighted to be a strategic partner in this project. We have been also conducting business in Iraq for many years, hence we expect to further enhance our relationship with Iraqi Ministry of Oil by taking advantage of this opportunity. We are delighted to be the first Japanese company to participate in such large-scale energy project in Iraq and aim to contribute to the country through this project," said Jun Nishizawa, Vice President and General Manager, Business Development Unit, Natural Gas Business Division B, MC.
"Shell and Mitsubishi’s cooperation on Iraq is not new. Shell, together with Mitsubishi and the Iraqi Ministry of Oil have been working on a Gas Master Plan to optimise natural gas production and utilization in Iraq. I am delighted that Mitsubishi Corporation has become our partner in the South Gas Utilization Joint Venture. I believe that Mitsubishi represents a strong strategic addition to the proposed joint venture and in our efforts to develop the energy infrastructure in Iraq," Mounir Bouaziz Vice President Gas & Power North Africa, the Levant and Iraq commented.