Iraq natural gas liquids contract award delayed until 2016

04 November 2015

Facility is part of the $17.2bn South Gas Utilisation Project

  • It is likely that it will not be awarded until after the first quarter
  • The latest delay is connected to budget problems in Baghdad
  • The contract is worth an estimated $500m

Iraq’s Basra Gas Company (BGC) is planning to award the contract for its planned $500m natural gas liquids (NGL) facility over 2016, according to Ali Khader al-Saady, the director general of Iraq’s state-owned South Oil Company (SOC).

“This will be awarded at some point over 2016,” he told MEED on the sidelines of an oil and gas conference in Turkey. “It is likely that it will not be awarded until after the first quarter.”

The contract award has seen repeated delays after bids were submitted in the first half of 2015.

Originally the contract was expected to be awarded in the third quarter of the year.

Al-Saady says the latest delay is connected to ongoing budget problems in Baghdad.

On 6 September, a letter from the Oil Ministry warned foreign companies developing the country’s southern oil fields that Baghdad had “sharply reduced the funds available to the ministry” due to the drop in government revenues from crude sales.

The NGL facility is part of the South Gas Utilisation Project, a $17.2bn scheme to capture and utilise flared gas from a number of fields across the south of Iraq. 

The first phase of the rehabilitation project will capture and dehydrate gas from the compressor stations at the West Qurna-1 and 2 fields, where about 200 million cubic feet a day (cf/d) of associated gas is currently flared.

On 4 November MEED revealed that plans for a liquefied natural gas (LNG) export facility, which is also part of the South Gas Utilisation Project, have been put on hold.

The LNG export facility is estimated to be worth $500m.

Design work for the LNG facility has already been completed.

Under current plans it won’t be tendered until at least 2020.

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