BASRA, Iraq, March 8 (Reuters) - Iraq’s first post-Saddam energy project with an international oil major took a step forward on Thursday, with Royal Dutch Shell announcing a $63 million contract given to Swiss engineer ABB Ltd to build an electricity generation plant in the south.
The $17 billion Basra gas project led by Shell and Mitsubishi and finalised in November 2011 after years of negotiations, aims to harvest natural gas that is now flared off by Iraq’s oil production and use it to generate electricity.
It is the first of many new projects that will see international firms invest in an energy sector severely damaged by decades of war and economic sanctions.
Jasser Hanter, general director of the Shell gas project, told reporters the latest contract would see ABB build two 25 megawatt power plants at Khor Zubair in southern Iraq.
Nine years after the U.S.-led invasion that toppled dictator Saddam Hussein, Iraq’s electricity grid still provides only intermittent power and little progress has been made increasing the output from its vast oil and gas fields.
The government said this week oil production was back above 3 million barrels a day for the first time since 1979. Iraq has signed deals with international firms that aim to more than double production in coming years. (Reporting by Aref Mohammed; Editing by Peter Graff and Elaine Hardcastle)