Shell-BGC Contracts: Inked but not yet approved!

Ahmed Mousa Jiyad is an independent development consultant, scholar and Associate with Centre for Global Energy Studies (CGES). He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN. He is now based in Norway.  The opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Media sources provide today (12th July 2011) conflicting reports on the deal with Shell regarding Basra Gas Company (BGC): some say it has been signed today others say the ministry has postponed the signing. However, signed or not, the BGC contracts according to the ministry’s known procedure is subject to the approval by the Council of Ministers.

Industry sources keep stating that Iraq produces 1.5 billion cubic feet per day (cftd) or so, out of which about 700 million cftd is flared for lack of infrastructure. Flared gas is both a waste of valuable finite energy source, and also damaging to the environment. This problem is not a new phenomenon; rather it has been a feature of the oil industry start from the beginning of the industry in the country.

But this must come to an end. Accordingly, there are two camps: a pro Shell-BGC on one side and inquisitive critics on the other.

The ministry of oil, few politicians and oil technocrats are among the pro Shell-BGC camp, while the majority of expressed professional opinions, officials and politicians are on the other camp.

The first camp argues in support of signing the BGC contracts and approving them by the executive branch and authority. The inquisitive critics, on the other hand, argue that any decision regarding such contracts could only be made after the said contracts have been thoroughly analysed and assessed by competent and professional bodies in an open and transparent way, and the federal parliament should be the ultimate authority to accept or reject these contracts.

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