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Mitsubishi Signs Agreement for Natural Gas Joint Venture with Iraq, Shell

Release

DUBAI, December 1, 2011 -- The Iraqi Ministry of Oil (MoO) formally has signed a joint venture agreement with Shell, the South Gas Company (SGC), an affiliate of MoO, and Mitsubishi Corporation (MC) on an initiative to capture flared gas in Iraq.

Baker Botts L.L.P. advised Mitsubishi on the joint venture with respect to structuring, concession and other aspects of Iraq’s first midstream gas project. This marks the first time international oil companies will participate in the midstream gas business in Iraq.

The Iraq government approved the project on November 15, 2011, followed by the signing of agreements with SGC, Shell and Mitsubishi on November 27, 2011. The agreement created the Basrah Gas Company (BGC) joint venture, comprised of Iraq’s SGC (51 percent), Shell (44 percent) and Mitsubishi (5 percent).

The 25-year project, one of the largest Iraq has agreed to with foreign energy firms, is expected to collect more than 700 million cubic feet per day of natural gas currently being flared in Iraq because of a lack of infrastructure to collect it. Officials expect BGC will ultimately handle 2 billion cubic feet per day.

By capturing and processing this natural gas, BGC intends to create a reliable supply of domestic energy, reduce unnecessary greenhouse gas emissions and create significant value for Iraq.

BGC plans to produce a feasibility study prior to starting operations in 2013. As a partner in BGC, Mitsubishi provides knowledge of the existing South Gas Company facilities and complementary technical and commercial capabilities in order to enhance the project’s value.

The Mitsubishi news release concerning the agreement is available here.



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