Shell Reaches Gas Capture Agreement With Iraq

Integrated energy major Royal Dutch Shell has reached an agreement with the Iraqi government to capture and use gas in the Basra region, in a deal worth up to $4 billion, according to the Financial Times.

Shell has become the first western oil firm to strike a deal with the Iraqi government since the US-led invasion of the country in 2003. Concurrently, the Iraqi oil ministry has also said that it has discarded its plan to award short-term technical support contracts to work on oilfields. The deal will be signed by the two sides in October 2008.

The news source reported that Shell’s project is expected to utilize the gas which is flared off for safety reasons at oil operations in southern Iraq, estimated to be 700 million cubic feet of gas or enough gas to meet the country’s entire power generation requirement.

Assem Jihad, Iraqi oil ministry spokesman told the Financial Times that Shell will be expected to put in place infrastructure to capture the gas and also look at ways to export the volumes. Mr Jihad also said that the project will be operated as a joint venture, with Shell accounting for a 49% stake and the Iraqi oil ministry owning the remaining 51%.