Shell withdraws from Iraqi petchem complex project
Oil giant Shell has said it has withdrawn from talks on building a petrochemicals plant in the southern oil hub of Basra, according to Iraq’s oil ministry. This comes after nearly 10 years of trying to get the project off the ground, dealing a blow to Baghdad’s aim of driving foreign investment in its energy sector.
“After in-depth evaluation on the feasibility of the Nebras integrated petrochemicals complex with our government partners, Shell has decided not to proceed with the project,” Shell said. “This decision is in line with Shell’s focus on performance, discipline and simplification, and on the high-grading of our chemicals portfolio.”
A statement from Iraq’s oil ministry said Shell would not continue discussions with the Ministry of Industry and Minerals and the Ministry of Oil regarding its role as “a major investor” in the Nebras Petrochemical Project, although it affirmed its continued support for the project through its partnership with Basra Gas Company (BGC).
The Nebras project has been in the works for nearly a decade. After carrying out feasibility studies in 2012, Shell signed an initial agreement in 2015 to build a petrochemicals complex in Basrah that would take advantage of associated gas gathered by BGC. Since then the project has stalled.
Iraq’s oil ministry said in July 2019 it was close to signing an agreement with Shell to proceed, but the company has only said it continues to evaluate the scheme.
Shell had a 49% stake in the venture that would have cost US$8 billion, much less than the initial US$11 billion.
Ethane feedstock for Nebras will come from BGC which gathers, treats and processes associated gas produced at the Rumaila, West Qurna 1 and Zubair oil fields. BGC is a joint venture between Shell, state-owned South Gas and Japan’s Mitsubishi.
According to Reuters, an Iraqi energy official with knowledge of the project talks said financial and contractual issues delayed reaching a final deal with Shell and “caused the initial deal to collapse”.
