Burning ambition

Shell's vice president for gas and power, MENA and the Levant, Mounir Bouaziz, reveals exclusively to Oil and Gas Middle East the details and challenges of its landmark deal in Southern Iraq.

The Middle East has been the world's dominant hydrocarbon producer for what seems like time immemorial. The region will look to augment this position in the imminent years, something that undoubtedly will require increased focus on natural gas production.

The Middle East and North Africa currently holds in the region of 45% of the world's proven gas reserves, a figure that is set to rise with increased exploration. Couple this with the rising importance of gas in the world energy market; it is expected to be just as important as the region's oil in the near future.

Royal Dutch Shell recently signed a Heads of Agreement (HOA) with the Iraqi government for the establishment of a JV with the South Gas Company in the southern sector of the country, which will involve the processing and marketing of natural gas currently being flared in the troubled nation.

Oil and Gas Middle East took the opportunity to discuss the deal with Shell's vice president for gas and power, MENA and the Levant, Mounir Bouaziz.

"The Iraq deal was the result of many years of work with Iraqis - the Ministry of Oil in particular. We started with a gas master-plan in 2005, creating a large database of all the resource prospects for gas, the domestic demand and the existing infrastructure. We then built an idea of the potential of Iraq in the gas sector, and we decided it could be a major player in the region," says Bouaziz.

In an area covering some 19,000 km², the JV will purchase roughly 700 million ft³ of natural gas from upstream operations that is currently being flared. It will also own and operate existing gas gathering, treating and processing facilities, repair non-functioning assets and develop new facilities.

"We were looking at opportunities when the Iraqis came to us and said we are flaring a lot of gas in the south - where most of the new production is going to come from. Our proposal was based on dealing with the gas in specific locations, creating specific projects. They came back and said they wanted Shell to look into a JV with the South Gas Company, to look after all the gas and infrastructure in the southern province" explains Bouaziz.

"Right now Iraq is flaring every day roughly 700-800 million ft³ of natural gas, a significant amount which could be turned into 300,000 LPG bottles for cooking, or could feed 4 GW of power generation capacity. The commercial value of this gas would equate to somewhere in the region of US$10 million," he adds.

Despite having substantial oil and gas potential, IOCs have not been jumping at the chance to move to Iraq, due to continued civil unrest and the lack of contemporary hydrocarbon legislation.

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