PROJECTS: Iraq's Basrah Gas Company gets $360mln loan for gas flaring reduction project

Project will reduce green house gas emissions while meeting Iraq's energy needs

  
Image used for illustrative purpose. A worker walks on an oil pipeline at Khurmala oilfield on the outskirts of the city of Arbil, in Iraq's Kurdistan region December 4, 2013.

Image used for illustrative purpose. A worker walks on an oil pipeline at Khurmala oilfield on the outskirts of the city of Arbil, in Iraq's Kurdistan region December 4, 2013.

REUTERS/Stringer

The International Finance Corporation (IFC), a part of the World Bank Group, said on Tuesday that it has arranged a five-year, $360 million loan to Iraq's Basrah Gas Company (BGC) to support one of the largest gas flaring reduction projects in the world.

BGC is an Iraqi joint venture created to treat and process associated gas that would otherwise be flared.

IFC said the project will increase BGC's processing capacity, thereby avoiding more unnecessary flaring and associated GHG emissions by around 10 million tonnes per annum while helping Iraq meet its growing power needs.

Iraq's Minister of Oil Ihsan Abdul Jabbar Ismail said the project is in line with the government's objectives of turning flared gas into cleaner valuable energy and reducing the impact of the GHG emissions on the environment.

In the absence of adequate infrastructure to capture and process associated gas, about 70 percent of all natural gas produced in the country is flared, the IFC statement noted.

Malcolm Mayes, BGC Managing Director added that the loan agreement demonstrates the strength of Iraqi companies and their ability to attract funding and trust from international banks. 

"The intent of this five-year loan is to support BGC's growth project and turn the otherwise wasted flared gas into much needed energy for the country," he said. 

Sérgio Pimenta, IFC Vice President for the Middle East and Africa said the agreement should help drive more private investments to tackle climate change and support inclusive growth in Iraq.

IFC's investment comprises a $137.76 million loan for IFC's own account, a $180 million loan in which participations were syndicated to eight international banks (Bank of China, Citi, Deutsche Bank AG, Industrial Commercial Bank of China, Natixis, Sumitomo Mitsui Banking Corporation, Société Générale and Standard Chartered Bank), and a $42.24 million loan through IFC's Managed Co-Lending Portfolio Programmr, a platform that allows institutional investors to participate in IFC's loan portfolio. The loan is without recourse to or guarantees from any of the shareholders.

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

(Writing by N Madhura; Editing by Anoop Menon)

(anoop.menon@refinitiv.com)

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