Iraq has appointed Japan’s Toyo Engineering Co. to help build a gas pipeline to Kuwait and a petrochemical plant linked to Baghdad’s bid to reduce gas burn and pay compensation due to the invasion of Kuwait in 1990, Reuters reported.
Sources in the sector said Toyo proposed to build a gas pipeline and start delivery after 2019.
Talks on the pipeline and the petrochemical plant are continuing, but the final investment decision has yet to be made, Kinsuke Waki, chief financial officer of Toyota, told reporters.
The project would be a blow to Royal Dutch Shell, which sought to dominate Iraq’s gas, before its relations with Baghdad were damaged following its withdrawal from major oil projects.
“Iraq needs an immediate reduction in gas burn as it pursues the goals it has committed to the World Bank,” said a senior source in the oil and gas sector working on the project, but not authorized to speak about it publicly.
Iraq ranks 12th in the world in terms of its 3.7 trillion cubic meters of gas reserves, but this figure is back to 10 of what Iran holds the world’s largest reserves.
Iraq extracts large quantities of gas associated with the extracted oil, and yet, this gas is being burned now.
Iraq’s long-term gas development plans have focused on Basra Gas Company, a 25-year $ 17 billion project in which Iraq has a 51 percent stake, Shell holds 44 percent and Japan’s Mitsubishi Corp. has a 5 percent stake.
The project aims to collect gas from fields in southern Iraq, including West Qurna 1 operated by ExxonMobil, Zubair operated by Eni of Italy, and Rumaila operated by BP.