Mitsubishi May Build Floating LNG Plant Off Iraq

Mitsubishi and Royal Dutch Shell (LSE: RDSA) are in talks with Iraq on a possible project to build a natural gas processing plant, with Mitsubishi planning a floating liquefied natural gas (LNG) plant to export some of the gas, according to the Wall Street Journal.

The remaining natural gas will be used in the domestic market, said Ahmed Al-Shamma, Deputy Minister for Refining and Gas Processing at Iraq's Ministry of Oil, on Wednesday.

The comment follows Iraq's oil ministry's remarks in December, in which the ministry said it was hoping to sign a $12 billion deal with Royal Dutch Shell and Mitsubishi to capture gas being flared from southern oil fields in order to help boost the country's power generation.

Al-Shamma didn't say whether the planned floating LNG plant was part of the $12 billion deal.

A spokesman for Mitsubishi said the company was considering producing and exporting LNG from the project, but didn't give details.

Iraq has proven gas reserves estimated at 112.6 trillion cubic feet, the world's 11th-largest, according to the U.S. Central Intelligence Agency's World Factbook, but the population sufferes from severe shortages of electricity.

Iraq produces 1.7 billion cubic feet of gas a day, of which some 700 million cubic feet is flared off.

In December, the Iraqi government said it had invited international specialized firms to build three gas-fired power plants in southern and western Iraq: the 500-MW Najibiyah plant in Basra governorate, a 500-MW Haydariyah plant in Najaf governorate and the 250-MW Akkas facility in the western Anbar province.

Japan recently announced that it will provide longer-term trade credit insurance to Mitsubishi's natural gas project with Shell.

(Source: Wall Street Journal)

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