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Iraq revives $8bn megaproject

27 February 2023

Iraq has revived plans to push ahead with the Nebras petrochemicals complex in Basra, which has an estimated value of $8bn.

Several official announcements have been made over recent weeks to signal that the government is making new progress on pushing forward with the project.

The country’s council of ministers has decided on the pricing for the gas to be used in the project.

It said the gas price used to operate the project will be $1.5 per million BTUs.

A decision has also been made regarding the land for the project, according to a government announcement.

General Company for Ports of Iraq (GCPI), a state-backed company under Iraq’s Transport Ministry, has transferred ownership of a tract of land to Iraq’s General Company for Petrochemical Industries so that it can be allocated to the project.

The price of the gas feedstock for the facility was a key sticking point in negotiations regarding the project. It is possible that now a price has been agreed upon, it could see progress. However, other questions about the project remain unanswered.

Previously government officials have said that UK-based Shell will be a partner in the project.

However, the completion of the partnership deal was never officially announced, and it is unclear whether the Iraqi government is still expecting Shell to participate in the project.

In September 2020, Iraq’s oil minister said Shell would control 49 per cent of Nebras.

He also said the project would become one of the largest petrochemicals projects in the Middle East and North Africa.

Under the terms announced in 2020, Iraq’s Oil Ministry and the Industry & Minerals Ministry will each own a 25 per cent shareholding.

Officials have also named Saudi Basic Industries Corporation (Sabic) as a potential partner for the project in the past, although no official agreements have been announced.

Iraq cannot meet domestic gas demand and is under pressure from the US to stop gas imports from Iran.

Iraq’s Industry & Minerals Ministry signed a memorandum of understanding (MoU) with Shell to develop the Nibras project in 2012, but plans have seen significant delays amid political instability and financial problems.

Officials have said the project will be completed over five to six years and will generate profits of around $90bn during its 35-year operational period.

The project scope includes the construction of the following:

  • Petrochemicals plant
  • Processing plant
  • Ethane-cracking unit
  • Warehouse
  • Storage facility

Under previously published plans for the project, ethane will be provided as a feedstock for the facility from Basra Gas Company’s projects to collect associated gas from oil fields in Basra.

The Nebras project was revived in early 2019 and, in March 2019, Shell said it was evaluating the project.

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Wil Crisp

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