- Title: IRAQ: Iraq signs gas deal with Shell
- Date: 23rd September 2008
- Summary: (W4) BAGHDAD, IRAQ (SEPTEMBER 22, 2008) (AGENCY POOL-ACCESS ALL): REPRESENTATIVE OF SHELL AND HEAD OF SOUTHERN GAS COMPANY SIGNING THE AGREEMENT JOURNALISTS ATTENDING SIGNING CEREMONY OF DEAL IRAQ'S OIL MINISTER HUSSEIN AL-SHAHRISTANI WITH SENIOR SHELL EXECUTIVE LINDA COOK (SOUNDBITE) (Arabic) IRAQ'S OIL MINISTER HUSSAIN AL-SHAHRISTANI, SAYING: "A delegation from Shell company headed by senior executive Linda Cook has visited us today to sign a deal for a joint venture between the Southern Gas Company and Shell. The deal includes the rehabilitation of gas facilities in Basra and constructing new facilities and also the capture of natural gas released as a by-product of crude oil extraction in Basra province, which is being burnt now , regrettably" JOURNALISTS ATTENDING CEREMONY (SOUNDBITE) (Arabic) IRAQ'S OIL MINISTER HUSSAIN AL-SHAHRISTANI, SAYING: "The project is one of the main strategic projects in Iraq, which worth some billions of dollars. With the signing of the deal Iraq will not only be a country which imports some oil by-products, but in addition to self-sufficiency It will become one of the world's key LNG exporting countries to the world market from Basra port" JOURNALISTS ATTENDING SIGNING CEREMONY OF DEAL
- Embargoed: 8th October 2008 13:00
- Keywords:
- Location: Iraq
- Country: Iraq
- Topics: Energy
- Reuters ID: LVA9R9NQBAYGJ4POILV2DXCZMNW5
- Story Text: Iraq signs a multi-billion dollar natural gas deal with Royal Dutch Shell, the second major energy deal agreed with a foreign firm since the U.S.-led invasion in 2003.
Iraq signed a multi-billion dollar natural gas deal with Royal Dutch Shell on Monday (September 22), the second major energy deal agreed with a foreign firm since the U.S.-led invasion in 2003.
Oil Minister Hussain al-Shahristani described the deal as an initial agreement that he said was worth "some billions" of dollars.
It was unclear when a full deal would be signed.
The agreement is between the energy giant and the state-run Southern Gas Company for a joint venture in Basra province in Iraq's south. Under the terms of the deal, Iraq will hold 51 percent in the venture and Shell 49 percent.
Iraq needs huge amounts of investment to boost oil and gas output and rebuild itself after years of sanctions and war.
"The deal includes the rehabilitation of gas facilities in Basra and constructing new facilities and also the capture of natural gas released as a by-product of crude oil extraction in Basra province, which is being burnt now , regrettably," Shahristani told reporters after the signing ceremony.
A senior Shell executive, Linda Cook, said the company would open offices in Baghdad and Basra, possibly becoming the first Western oil major to do so in years.
Shell is also expected to produce dry gas as well -- gas which is not a by-product of oil.
"The project is one of the main strategic projects in Iraq, which worth some billions of dollars. With the signing of the deal Iraq will not only be a country which imports some oil by-products, but in addition to self-sufficiency It will become one of the world's key LNG exporting countries to the world market from Basra port," Shahristani added.
Liquefied natural gas (LNG) is gas cooled to liquid form for export on tankers. Surplus LNG, after Iraq's domestic allocation, will be exported through Basra, Shahristani said.
Shell will also construct new gas facilities to process the by-product gas, some 700 million cubic feet of which Iraq burns off, or flares, each day, the Oil Ministry has said. Shell will buy some of the gas itself.
The deal may bring hopes of Iraq eventually supplying Europe with gas via pipeline closer to reality. Russia's invasion of Georgia has boosted European and U.S. efforts to reduce the EU's reliance on Russia for energy supplies.
Iraq, which has the world's third largest proven oil reserves, has said it wants to focus on development of its gas fields and plans to become a major supplier to Europe.
However, key diversification projects such as the Nabucco pipeline which aims to bypass Russia and import Central Asian and Middle East gas to Europe, have been hampered by difficulties in securing gas supplies.
Iraq's proven natural gas reserves are 112 trillion cubic feet, while probable reserves are closer to between 275 and 300 trillion cubic feet, a 2007 report from the U.S. government's energy statistics unit said.
Iraq recently agreed a 3 billion U.S. dollars oil service contract with China, the country's first major oil deal with a foreign firm since the fall of Saddam Hussein more than five years ago.
Buoyed by sharp drops in violence, Iraq opened its giant oil and gas fields to foreign firms on June 30, announcing long-term development contracts with a view to raising oil output by a combined 1.5 million barrels per day at those fields.
Iraq wants to raise total oil output to 4.5 million bpd by 2013, from around the current 2.5 million bpd.
Baghdad has said it wants to sign the long-term development contracts by mid-2009.
Shahristani will meet energy firms bidding for those oil and gas service contracts in London next month to discuss details of the fields on offer as well as contract terms, the Oil Ministry has said.
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