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The Iraq government could risk missing the deadline for the proposed US$4 billion South Gas Utilisation Project (SGUP), a joint venture currently under development by the Iraq’s Ministry of Oil and the Anglo-Dutch supermajor.
AFP reported that an Iraq oil ministry spokesman, Assem Jihad, admitted that the one-year deadline that was agreed when Baghdad signed the deal with Shell may not be met, but that didn’t mean the project would not go ahead.
“The negotiation to form a joint Iraqi-foreign company … is still ongoing, and the period which was previously announced of one year can be extended,” AFP reported Jihad as saying.
SGUP joint venture is being established in order to 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.
Shell recently sold a 5% stake in the project to Mitsubishi Corp. The Japanese company has knowledge of the existing South Gas Company facilities and complementary technical and commercial capabilities.
The joint venture also said that it could develop a liquefied natural gas (LNG) facility to also export natural gas.
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.
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