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The World’s Largest Gas Flaring Environmental Disaster

Senior executive directors of Royal Dutch Shell Plc had advance sight some days ago of a draft of the article below. It is a follow-up article by a whistleblower whose identity is known to us.

The World’s Largest Gas Flaring Environmental Disaster
Shell Exposing The World Bank Group to Corruption & US Sanctions

Under Shell’s egregious stewardship, Iraq is literally burning billions of dollars in lost revenue, and the country’s power plants are being deprived of the much-needed fuel supply to end Iraq’s chronic power crisis.  The power outages have been the main destabilizing force in the country, which have also often led to mass protesting, civil unrest, and countless civilian casualties.    

By: The Iraqi Governance Revolt & Systemic Overhaul!

Introduction

Iraq holds the 12th largest natural gas reserve in the world, however, the country equally represents 12% of global gas flaring, “suggesting there may be systematic and structural barriers to reducing gas flaring practices,” according to the latest Global Gas Flaring Tracker Report produced by The World Bank Group.

Although officially signed in 2011, Royal Dutch Shell (Shell) formalized the establishment of its gas monopoly in Iraq, the $17 billion Basrah Gas Company (BGC), in May 2013, which also gave birth to the so called ‘world’s largest flare reduction program’.

However, in reality, Iraq has retained the infamous title as the 2nd largest gas flaring country in the world, five years in a row, and gas flaring volumes have also increased by 10% during the reported period from 2015-19.  Therefore, effectively transforming BGC into the so called ‘world’s largest flaring environmental disaster’, and also representing the largest carbon footprint and environmental damage currently caused by a single project in the world.

Although BGC’s Managing Director is appointed by Shell, moreover Shell also steers and holds significant sway in the organization’s decision-making, by simply labelling BGC as a non-Shell operated venture, the company manipulatively evades accountability and reporting requirements for the abundant volumes of gas being deliberately and systematically flared.        

BGC’s Ambitious Start, On Paper

In early 2014, BGC awarded front-end engineering and design (FEED) contracts for a new natural gas liquids (NGL) plant with a processing capacity of 530 million standard cubic feet per day, along with a greenfield liquified natural gas (LNG) export terminal with a 4.5 million tonne per year capacity.

The scope of the FEED contracts also involved submitting engineering, procurement, and construction (EPC) packages, thereby preparing all the paperwork for BGC to embark on its expansion, and laying the ground work for the implementation of the so called ‘world’s largest flare reduction program’.

However, in reality, both projects would never come to see the light of day, as BGC’s growth program was merely designed to look good on paper, and was intended to deceive The World Bank Group for funding.

In April 2015, the UN Secretary-General, Ban Ki-moon, and The World Bank President, Jim Yong Kim, launched the ‘Zero Routine Flaring by 2030 Initiative’, to which Shell immediately signed up for, and the company became one of the first endorsers of.

By September 2015, Shell Iraq was awarded The World Bank’s prestigious Global Gas Flaring Reduction Partnership (GGFR) Excellence Award, “In recognition of Shell, and its partners in the Basrah Gas Company Joint Venture, implementing a major flare reduction program in a challenging socio-political environment.”

BGC’s Implementation an Inconvenience to Shell   

Having acquired the global prestige from The World Bank Group, moreover having achieved recognition for the implementation of BGC, shortly thereafter on 9 November 2015, Shell’s gas venture formally suspended the execution of a critical gas project citing, “low oil prices and a challenging political climate,” according to a letter issued by BGC to the project’s contractor, the infamous Unaoil group.

BGC had hired the so called ‘Bribe Factory’ -also commonly referred to as the ‘world’s biggest bribe scandal’- in order to undertake the rehabilitation of critical gas compression stations as a part of BGC’s revamping program, which was suddenly suspended.

Ironically, The World Bank Group’s excellence award was issued to Shell in recognition of Iraq’s challenging political environment, and the company had manipulatively used the country’s political climate as an excuse to suspend the critical brownfield project, thereby deliberately hindering the capturing of the abundant volumes of flared gas.

According to a subsequent letter issued by Unaoil group to its subcontractors, on 27 January 2016, BGC had formally terminated the contract for its convenience on 10 December 2015, as it proved to be inconvenient for Shell to implement the BGC development.

To make matters worse, the value of work done had not even reached $50 million at the purportedly $17 billion gas development, thereby blatantly demonstrating that Shell was not financially committed to developing the so called ‘world’s largest flare reduction program’.

The letter also stated that Unaoil group was, “verbally informed by BGC’s representatives that: BGC is due to receive a payment of USD 300 million in the very near future.  The money has been received from The World Bank and is in Iraq awaiting approval to distribute.”

It became abundantly clear that Shell was deliberately withholding its own financial resources for the implementation of BGC, and the company was instead relying on The World Bank Group for funding.

Shell had become a signatory to and endorser of the ‘Zero Routine Flaring by 2030 Initiative’, in order to create the optical illusion of the company’s commitment to reducing flaring, moreover to deceive and hustle The World Bank Group for funding.

Prioritizing Iran’s Debt Payment Over Reducing the Gas Flares 

“Following the lifting of applicable EU and U.S sanctions, we can confirm that payment of the outstanding Shell debt to NIOC [National Iranian Oil Company] has now been made,” a Shell spokesman said in a statement, as reported by Reuters on 7 March 2016.

Shell had rushed to wire €1.77 billion ($1.94 billion) of hard-currency to the Iranian regime, and the company had blatantly prioritized settling a debt payment with Iran, over capturing the abundant flares and reducing the catastrophic environmental damage being caused at the so called ‘world’s largest flare reduction program’.

To add insult to injury, the same debt payment made to Iran was previously blocked by the UK government in April 2013, as Shell was, “trying for months to find a way to work around the international sanctions,” as reported by Reuters.  Overlooking Shell’s questionable commitment and loyalty to Iran, the company openly had funds available and was deliberately failing on its financial obligations, in order to implement the BGC development.

After Shell’s announcement of settling its debt with Iran, literally the following day on 8 March 2016, BGC re-awarded the project it had terminated for its convenience with the infamous Unaoil group, along with a portfolio of brownfield projects to China’s CPECC (CNPC’s contracting arm).

However, according to CPECC’s project reference list, the award was made on a deferred payment scheme (EPC+Finance), thereby demonstrating Shell’s newly acquired reliance on external Chinese financing instead of its own financial resources, in order to progress the development of the ‘world’s largest flare reduction program’.

The Stunted Growth of BGC’s Expansion Program

Despite BGC’s deliberate and categorical failure in capturing the abundant gas being systemically flared, furthermore given that the volumes of gas being flared had amassed to 12% of global flares, BGC finally announced on 31 January 2019, its final investment decision (FID) to begin implementing BGC’s growth program.

The new Basrah NGL (BNGL) plant had a processing capacity of 400 million standard cubic feet per day, which also shockingly represented a 25% reduction in capacity from the initial NGL FEED contract awarded back in 2014.

Rather than catching up with the abundant and increased volumes of gas being flared, BGC’s implementation strategy was instead designed to ensure that the burning of Iraq’s natural gas resources outpaced the capacity to capture the flares, thereby redefining the project as the ‘world’s largest gas flaring environmental disaster’.

The estimated cost of the BNGL facility was also merely $1 billion, and Shell once again relied heavily on The World Bank Group for funding, whom provided a $400 million Green Loan for the project.

The BNGL project also marked the first Green Loan issued to Iraq, and the loan provided a signal of “The World Bank Group’s commitment to Iraq’s energy sector and its responsible development,”  which unfortunately, is not the case under Shell’s egregious stewardship.

The World Bank Group’s Corruption & US Sanctions Exposure

Shortly prior to the FID of the BNGL project, BGC had committed the gas from The World Bank Group funded facility to a power plant, the 3,000 megawatt (MW) Rumaila IPP, which is owned by an Iraqi oligarch who had debuted in the New York Times article ‘Hot-Money Cowboys of Baghdad’, and was more recently mentioned in the Wall Street Journal over corruption allegations.

The Wall Street Journal article stated that, “yet any firm that partners with him [Ali Shamara] runs -at the very least- serious reputational risks,” which BGC accepted, and The World Bank Group unknowingly assumed long-term corruption and reputational risks.

The special purpose vehicle (SPV) company developing the Rumaila IPP, Shamara Holding Group Limited (Shamara Holding), is also registered in the tax haven of the British Virgin Islands (BVI), the entity was a client of the infamous Mossack Fonseca law firm, and Shamara Holding also debuted in the ‘Panama Papers’, thereby hitting a grand slam in the world of scandals.

To make matters worse, the SPV is also being openly funded by a US designated State Sponsor of Terrorism, Iran, Shell’s priority partner and client.  The $2.5 billion Rumaila IPP also represents one of Iran’s largest foreign direct investments (FDI) globally, and the Iranian regime’s most strategic hard-currency source.

Despite the reinstatement of US sanctions on Iran, moreover in blatant defiance to the US administration’s ‘maximum pressure’ sanctions campaign against the Iranian regime, on 25 August 2019, BGC also publicly announced committing The World Bank funded facility to sourcing all of its power requirements from the Iranian owned and operated Rumaila IPP.

Shell’s reckless behaviour had exposed The World Bank Group to long-term corruption and US sanctions risks, moreover the BNGL project had found itself egregiously undermining US national security interests and foreign policy objectives, as the facility deviated from its intended purpose and is merely configured to serving Iran’s interests.     

The World’s Largest Gas Flaring Environmental Disaster

Despite being entrusted to develop Iraq’s gas sector, and also being granted exclusive rights to harvest the country’s abundant gas flares, Shell chose to instead abuse its monopolistic power and control by deliberately flaring Iraq’s natural gas resources, to the detriment of humanity and the environment.

Under Shell’s egregious stewardship, Iraq is literally burning billions of dollars in lost revenue, and the country’s power plants are being deprived of the much-needed fuel supply to end Iraq’s chronic power crisis.  The power outages have been the main destabilizing force in the country, which have also often led to mass protesting, civil unrest, and countless civilian casualties.     

In addition to Iraq’s staggering revenue losses, the country is also being forced to import energy from Iran, unnecessarily extorting the country of approximately $6 billion a year.  The status quo also compels Iraq to remain highly vulnerable to Iranian energy imports, and egregiously undermines the country’s national energy independence and security.

To make matters worse, the gas being flared also provides the raw material for Iraq’s petrochemical industry, to which Shell also has exclusive rights in developing via its Nebras petrochemical venture.  Considering the petrochemical feedstock is also being deliberately burned, the so called ‘Beacon of Light’ in Arabic, will predictably remain in the dark, and Iraq will never come to realize its petrochemical powerhouse potential.

Additionally, given the fact that Iraq has consistently ranked as the 2nd largest gas flaring country in the world, five years in a row, and the country also represents 12% of global gas flaring with volumes on the rise, the dire circumstance has direct implications on the the world’s environment, and the human race at large.

Ultimately, the unthinkable environmental horrors being committed by Shell in Iraq, have truly transformed the so called ‘world’s largest flare reduction program’, into effectively the ‘world’s largest gas flaring environmental disaster’.

To add insult to injury, the founding brothers of Shell Transport & Trading Company, Marcus & Samuel Samuel, were also originally from Iraq, and they would both be outraged and repulsed by the implosive and unsustainable state of governance at the company they once established.   

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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