Iraq to ink $12b Shell gas accord

November 28, 2010 - 0:0

BASRA (Trade Arabia) -- A multibillion-dollar final deal between Iraq and Royal Dutch Shell to capture flared gas at southern oilfields is set to be signed before the year-end, a senior Iraqi oil official said.

The $12 billion deal, a venture between Iraq’s South Gas Company (SGC), Shell and Japan’s Mitsubishi, involves the capture of associated natural gas produced at fields near the oil hub of Basra, including Rumaila, Iraq’s workhorse.
“We hope to sign the agreement after it is ratified by the cabinet before the year-end,” SGC director general Ali Khudhier said on the sidelines of an oil and gas conference in Basra.
Deputy Oil Minister Ahmed Al Shamma said the final draft of the deal will be completed in 10 days.
Last month Oil Minister Hussain Al Shahristani said the contract would not include the supergiant 12.6 billion-barrel Majnoon oilfield being developed by Shell and Malaysian partner Petronas.
Khudhier said associated gas from Majnoon could be developed by the SGC. ‘As long as there are gas facilities why don’t we utilise the project?’
The deal with Shell and Mitsubishi will cover Rumaila, being developed by BP; CNPC-Zubair, being worked on by Eni, Occidental and Kogas; and West Qurna, whose two projects are in the hands of Exxon, Shell, Lukoil and Statoil.
The joint venture known as the Basra Gas Company, will not have direct contact with the international firms developing the fields, Khudhier said.
The Oil Ministry delayed finalising the deal in September because of legal issues about the joint venture.
Iraq flares 1bn cubic feet of gas daily to generate electricity in a country suffering chronic blackouts more than seven years after the US-led invasion.
Earlier Al Shamma said Iraq’s cabinet has the authority to sign the contract. “The current government will continue its work until there is a new one,”‘ Khudhier said.
Initial production from the Siba gas field in Basra is expected within two to three years, Khudhier said.