The Basrah Gas Company (BGC) consortium has started design work for a new natural gas liquids (NGLs) project at Al-Ratawi in the south of Iraq, which will feature about 500 million cubic feet a day (cf/d) of production capacity.

Dual front-end engineering and design (feed) contracts have been awarded to two consortiums: Technip of France with China’s China Huanqiu Contracting & Engineering Corporation; and Japan’s Chiyoda with Italy’s Saipem.

Engineering, procurement and construction (EPC) bids are expected in 2014, and construction on the scheme is expected to begin next year.

Iraq currently produces a total of about 1.6 million cf/d of associated gas from its southern oil fields, of which 1.2 million cf/d is flared.

BGC is a joint venture between UK/Dutch oil major Shell Group, Japan’s Mitsubishi and state-owned South Gas Company, which is working to rehabilitate and expand new infrastructure for associated gas from the Rumaila, West Qurna-1 and Zubair oil fields.

Since commencement of operations last year, BGC has increased its gas capacity from 240 million cf/d to about 500 million cf/d. The consortium aims to bring total capacity to 2 billion cf/d over the next few years.

Saipem was awarded two major design deals in February for a liquefied natural gas (LNG) production facility and export terminal.

BGC estimates that once the Al-Ratawi plant is completed, it will supply enough dry gas to generate the equivalent of 3GW of electricity, sufficient to supply about 3.5 million Iraqi homes with power.

By 2020, BGC could supply enough dry gas to replace more than 140,000 barrels of fuel oil used each day for power generation, freeing the liquid for export.