Some 700 million standard cubic feet per day of natural gas, which is produced by upstream suppliers in association with oil, is currently being flared in southern Iraq.

By capturing and processing this natural gas, the joint venture (JV) is expected to create an important and reliable supply of domestic energy, reduce greenhouse gas emissions, and create significant value for Iraq.

The JV will purchase associated natural gas from upstream operations; own and operate existing gas gathering, treating and processing facilities; and invest in repairing non-functioning assets and develop new facilities. The South Gas Company will be the 51% majority shareholder in the JV, with Shell holding 49%.

The JV will be focused initially on creating reliable sources of domestic energy, including liquefied petroleum gas, natural gas liquids, natural gas supply for power generators, and deliveries to local distribution networks. In the future, the JV could develop a liquefied natural gas facility to export natural gas not needed for local domestic use.

Linda Cook, executive director of Royal Dutch Shell, said: Shell is an industry leader in the global natural gas sector. Iraq has one of the world’s largest natural gas resource bases and I am delighted that the Iraqi government including the ministry of oil have supported Shell as the partner for joint venture with the South Gas Company.