Eric Watkins
OGJ Oil Diplomacy Editor
LOS ANGELES, Aug. 25 -- Mitsubishi Corp. said it has accepted an invitation issued by the Iraqi Ministry of Oil and Royal Dutch Shell PLC to take a stake in the proposed South Gas Utilization Project (SGUP) joint venture, now under development.
Mitsubishi said the JV will gather, treat, and process raw gas produced in the southern province of Basra and sell the processed natural gas and associated products such as condensate and liquefied petroleum gas for use in the domestic and export markets.
The Japanese firm also said that in the future the joint venture “could develop [an LNG] facility to also export natural gas to create a new benefit for Iraq’s economy.”
The JV aims to utilize the 700 MMscfd of gas that is currently being flared in southern Iraq.
“By capturing and processing this natural gas, the joint venture aims to create an important and reliable supply of domestic energy, reduce unnecessary greenhouse gas emissions, and create significant value for Iraq,” Mitsubishi said.
The agreement follows earlier reports that Iraq had said Mitsubishi could partner with Shell in a JV to build the pipeline and plant facilities needed to exploit associated gas from Basra-area oil fields (OGJ Online, Feb. 12, 2009).
Shell and Iraq’s state-owned South Gas Co. agreed in September 2008 to establish the SGUP JV to invest in gas production in Basra. South Gas holds 51% of the venture, while Shell holds 44% and Mitsubishi holds 5%.
Separately, three Japanese firms have reached a basic agreement to develop Nasiriyah oil field in southern Iraq, which produces about 600,000 b/d of oil.
Officials from Inpex Corp., JGC Corp., and Nippon Oil Corp. reached the agreement with officials of Iraq's Ministry of Oil on Aug. 24 in Istanbul.
Contact Eric Watkins at [email protected].