Shell and the Iraqi government have settled most pending legal issues that have delayed a $12 billion gas deal for more than two years, according to a Dow Jones Newswires report.
“We are meeting with Shell and Mitsubishi in the middle of next week to finalize some points and we are hoping to sign an initial contract the following day,” an unnamed official told Dow Jones Newswires. The official said an initial agreement could be signed by the middle of this week.
Since the signing of an initial agreement in 2008 to begin negotiations on the project, the Iraqi oil ministry has been working to finalize a joint venture between its South Gas Company, Shell and Mitsubishi to capture and exploit the huge volumes of gas flared from three giant southern oil fields, Rumaila, Zubair and West Qurna Phase 1 which to date have been largely flared.
According to the draft deal with Shell and its partners, the venture would meet local needs and the extra produced gas would be for exports outside Iraq.
The delays were largely caused by disagreement on the Iraqi government’s need for a cheap source of gas for power generation with Shell and Mitsubishi’s requirement that as much gas as possible be sold at open market prices. No details have been released on how this dispute was resolved.
Once settled with the oil ministry the deal still needs the approval of the Iraq government and may be subject to the wrangling currently beseting the parliament.
