Iraqi joint venture to capture natural gas

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BASRA, Iraq, May 2 (UPI) -- Forming a joint venture with British and Japanese companies shows the Iraqi government is serious about the energy sector, a Basra company official said.

State-owned South Gas Co., Shell and Mitsubishi announced joint venture Basrah Gas Co. started operations in southern Iraq. The project is described by Shell as the largest natural gas flare reduction facility of its kind.

South Gas Co. says about 70 percent of the natural gas associated with oil production in the region is burned off during flaring. Associated gas comes from production at the Zubair, West Qurna-1 and Rumaila oil fields.

The joint venture will sell the processed natural gas to South Gas Co. Shell said the Basra company would work to upgrade facilities so production could increase from 400 million cubic feet of natural gas to 2 billion cubic feet.

"The birth of this joint venture is a clear testament to the determination of the Iraqi government to develop the country's energy sector and a true reflection to the significant improvement in the security situation that is stimulating investments in Basra." Basrah Gas Co. Managing Director Gasser Hanter said in a statement.

Political disputes and national security issues are hindering Iraq's full energy potential. While southern port regions may be stable, bombings and assassinations have sparked concern from the United Nations in recent weeks.