Vinson and Elkins advises Iraq Oil Ministry in $17bn Basrah Gas Company joint venture
- Iraq: Wednesday, December 14 - 2011 at 16:29
- PRESS RELEASE
Vinson and Elkins LLP and Cleary Gottlieb Steen and Hamilton LLP are acting as joint counsel to the Ministry of Oil of the Republic of Iraq in connection with the Basrah Gas Company project, a joint venture between South Gas Company (an Oil Ministry affiliate) and affiliates of Royal Dutch Shell PLC and Mitsubishi Corporation. The transaction agreements were signed on November 27, 2011.
Currently, an estimated 700 million+ standard cubic feet per day (mmscf/d) of natural gas is being flared due to a lack of processing capacity, resulting in significant environmental damage and economic waste. Substantial reduction of this flaring will provide reliable domestic electricity generation and promote economic and industrial development.
Under the transaction agreements, the parties will create a new company, Basrah Gas Company (BGC), in which South Gas Company will hold a 51% interest, Shell 44%, and Mitsubishi 5%. BGC will process associated gas from the three fields in order to satisfy domestic consumption requirements and will also have the right to pursue a Liquefied Natural Gas (LNG) or other gas export project for any remaining gas. The residual dry natural gas will be used in Iraq, primarily to product electric power. If the volume of gas produced is greater than domestic requirements, BGC will have the right to construct an LNG plant or other export facility. The total investment requirement for this project is currently estimated at $17bn.
"Vinson & Elkins has a well-established Iraq practice, having advised on a number of important matters involving Iraq over the past several years and we are thrilled to be working with the Ministry on such an innovative and large-scale project," said V&E Middle East Managing Partner, Ayman Khaleq. "The signing last week was a key milestone for this deal, which is significant to the overall gas industry in Iraq, and it's a privilege to be a part of that."
The Vinson & Elkins team includes partners Christopher Strong and Ahmed el-Gaili, and associates Brett Thornton and John Papini. The Cleary Gottlieb team includes partners Andrew Bernstein and Gamal Abouali and associate Nawal Lachguar.
Vinson & Elkins LLP is an international law firm with approximately 760 lawyers across 15 offices worldwide. V&E is a global leader in energy-related projects, transactions and litigation worldwide and has been recognized as "the world's leading energy law firm" by Euromoney every year since 2005.
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