BAGHDAD – Royal Dutch Shell <RDSa.L> signed a deal with Iraq on Wednesday worth $11 billion to build a petrochemicals plant in the southern oil hub of Basra, boosting the country’s aim to become a major regional energy player and diversify its income.
Industry Minister Nasser al-Esawi told a news conference the Nibras complex, which is expected to come online within five to six years, would make his country the largest petrochemical producer in the Middle East.
Iraq, which relies on oil for more than 90 percent of its revenue, has been hit hard by the steep fall in global oil prices since June, with Brent crude now hovering around $50 a barrel.
Prime Minister Haider al-Abadi said last week he feared lower revenues from oil could hurt Iraq’s military campaign against the Islamic State militants who swept across northern Iraq last summer, prompting U.S.-led airstrikes.
“The Nibras complex will be one of the largest (foreign) investments (in Iraq) and the most important in the petrochemical sector in the Middle East,” Esawi said.
He said the factory would produce 1.8 million tonnes of petrochemical products per year.
A Shell spokesman told Reuters Iraq’s cabinet had authorised the project on Jan 13. Company officials declined to confirm the size or types of output expected from the facility.
“Shell has been working with the Iraqi ministries of industry and minerals and jointly with the ministries of oil and transport to develop a joint investment model for a world-scale petrochemical cracker and derivative complex in the south of Iraq,” the spokesman said.
Shell is one of the main major oil companies operating in south Iraq, operating the Majnoon oilfield and leading the Basra Gas Company joint venture. It signed a memorandum of understanding with the ministry for the Nibras project in 2012.
(Additional reporting by Rania El Gamal in Dubai; Writing by Stephen Kalin; Editing by Greg Mahlich and William Hardy)
This article was written by Saif Hameed from Reuters and was legally licensed through the NewsCred publisher network.