A specialized American website touched on the vast resources available in Iraq from oil and gas and the extent of this country's ability to become a global producer of high-value petrochemicals, noting that it will greatly benefit from the huge revenues from these value-added products.

In a report published by the American website "Oil Price", writer Simon Wattkins said that there were plans to do so several years ago, especially the "Nibras Project" for the petrochemical industries. According to comments from the Iraqi Ministry of Oil, talks were held last week to endorse the "final concept" of this long-awaited plant, and "emphasize the need to accelerate plans for the implementation of this project."

In January 2015, Shell signed the original deal to build the then $11 billion nuclear power plant at Basra's Southern Oil Centre, after signing the original memorandum of understanding in 2012.

At the time, hopes were high on both sides for the future of the Nibras project, as then-Minister of Industry Nasser al-Issawi said at a press conference that the nuclear power plant would be operational in 5 or 6 years and would make his country the largest petrochemical producer in the region.

Monetary compensation

For Shell, this provided it with the opportunity to commence its initial operations in Majnoon and West Qurna 1 and transform it into a leading downstream refinery.

These stocks of associated oil and gas were provided to be added to potential feedstock that would come from Shell's 44 percent stake in the Basra Gas Company's $17 billion project, which began 25 years ago. The Basra gas project is designed to collect gas from fields in the south including West Qurna 1, Zubair and Rumaila.

Nibras' design plans were for a project that could produce at least 1.8 million metric tons per year of various petrochemicals. This would make it the first and largest petrochemical project in Iraq since the early nineties and one of only 4 such major complexes across the country. The other areas—Khor al-Zubair in the south, Musayyib near Baghdad, and the Baiji refinery complex in the north—were all managed by the Iraqi General Petrochemical Industries Company.


However, since the start of the Nibras project, the problems have become clear for Shell, as has many foreign oil and gas companies that have operated in Iraq. According to Transparency International, in its publications on the Corruption Perceptions Index, Iraq is always ranked among the 10 worst countries out of 180 countries in terms of the scale and scope of corruption.

In fact, Shell was unlucky enough to sign the original memorandum of understanding for the Nibras project during the period when Iraq lost about $14.4 billion in "cash compensation" payments, according to a statement made by the oil minister in 2015 and later Iraq's prime minister Adel Abdul Mahdi.

Petrochemical Products

This "monetary compensation" includes what can be classified as bribery and corruption payments that ended either in the hands of Iraqi officials, intermediaries of various exploration and development deals, or others involved in such deals. Also during this period, ExxonMobil began to face the same kind of problems in its important seawater supply joint venture.

There is still a truly enormous opportunity in the Nibras project that Iraq can exploit. As explained exclusively to Oil Price in 2018 by a senior figure in a Russian company that was looking to acquire the Nebras project, Shell has done a really good job so far with BGC, but the country needs to implement its plans to develop a second gas hub away from Basra.

"This will bring the volume of gas production to an average of one billion standard cubic feet per day, so that ethane can be extracted on a sustainable and reliable basis, which will provide sufficient volume for a large petrochemical plant to be viable.

By 2020/2019, BGC had reached a peak production rate of more than this required level (1.035 billion standard cubic feet per day), the highest in Iraq's history.

The report concluded with the source saying that the global ethylene production facility - one of the most demanded petrochemical products in the world, especially from China - ranges from 1 to 1.5 million tons of ethylene production, and 1 million tons per year, and the ethylene facility will require a supply of about 3.<> million tons per year of ethane.

There must be a sustainable and reliable supply for at least 20 to 25 years, and overall, building all the necessary parts of Iraq's efficient global petrochemical sector will require about $40 to $50 billion."