IFC, a member of the World Bank, has announced what is believed to be a landmark loan for Basrah Gas Company (BGC) to support one of the largest gas flaring reduction projects in the world.
BGC, an Iraqi joint venture between the Iraqi Government, Shell and Mitsubishi, was created to treat and process associated gas that would otherwise be flared.
Iraq has significant reserves of natural gas, mainly produced as a by-product of legacy oil extraction.
However, in the absence of adequate infrastructure to capture and process it, around 70% of all natural gas produced in the country is flared.
The project is expected to increase BGC’s processing capacity, avoiding more unnecessary flaring and associated greenhouse gas emissions by around 10 million tons per year.
It will support Iraq’s transition to a lower carbon path and improve access to a domestic energy source, helping the country meet its growing power needs.
IFC is the lead arranger of the five-year, $360 million (£260m) loan to the company.
Iraqi Oil Minister Ihsan Abdul Jabbar Ismail said: “Signing the loan agreement reinforces the collective efforts to increase investment in associated gas flaring reduction using world-class technologies. It is in line with our objectives of turning flared gas into cleaner valuable energy and reducing the impact of the greenhouse gas emissions on the environment.
“This loan opens new horizons for cooperation and collaboration that serve common purposes and interests, reiterating Iraq’s commitment to increasing investment in associated gas flaring reduction and to achieving the objectives set by the Paris Agreement.”