IFC, a member of the World Bank Group, announced on Sunday that it has been mandated by Iraq's Basrah Gas Company (BGC) to lead, arrange, and syndicate a second loan of up to $500 million to further advance one of the world’s largest gas flaring reduction projects.

BGC, located in Basra province, is a joint venture between Iraq’s South Gas Company, UK's Shell, and Japan's Mitsubishi Corporation set up in 2013 to treat and process associated gas and reduce flaring from three oilfields (Rumaila, Zubair, and West Qurna 1) in southern Iraq.

The new investment will support the ongoing gas flaring reduction project and deliver additional fuel for domestic power generation, according to an IFC press statement.

The deal was among the $1 billion in new investments announced by the lender during the IFC Partnerships Day in Baghdad on Saturday.  

In 2021, IFC had arranged the first loan of $360 million for partially funding the greenfield Basrah Natural Gas Liquids (BNGL) project, which aimed to raise BGC’s processing capacity by about 400 million standard cubic feet per day – a 40 percent increase – by capturing associated gas from nearby oil fields. 

The five-year loan included $137.76 million from IFC’s own account, $42.24 million from its Managed Co-Lending Portfolio Programme (MCPP), and a $180 million syndicated tranche with eight international lenders, including Bank of China, Citi, Deutsche Bank, ICBC, Natixis, SMBC, Société Générale, and Standard Chartered.

BGC had announced then that BNGL will increase the company's ability to reduce greenhouse gas emissions by around 10 million tonnes per annum.

Iraq joined the Global Gas Flaring Reduction initiative in 2011 and committed in 2013 to eliminate all routine natural gas flaring by 2030.

BGC's output helps feed 75 percent of Basra province’s electricity demand and 65 percent of Iraq's overall LPG demand.

(Writing by Anoop Menon; Editing by Dennis Daniel)

(anoop.menon@lseg.com)

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