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Iraq, Shell Sign Major Deal To Develop Gas In South


Flames burn off excess gas behind policemen standing guard at Zubair oil field in Iraq's southern province of Al-Basrah in late June.

Flames burn off excess gas behind policemen standing guard at Zubair oil field in Iraq's southern province of Al-Basrah in late June.

BAGHDAD -- The Iraqi government, Royal Dutch Shell, and Japan's Mitsubishi have signed a mammoth deal in Baghdad to develop the natural gas industry in southern Iraq, RFE/RL's Radio Free Iraq reports.

Munir Bouaziz, Shell vice president for the Middle East and North Africa, told RFE/RL that the deal was signed on July 12 at the Oil Ministry in Baghdad.

He said Iraqi Oil Minister Abdul Karim Luaybi still must submit the deal to the cabinet for final approval.

Bouaziz declined to reveal the amount of the agreement but said it might be the biggest signed by Iraq this year. He also said Royal Dutch Shell might become the largest investor in Iraq once the deal was approved.

Some media reported that the agreement was worth between $12 billion and $17 billion.

The deal, which covers a 25-year period, will lead to the creation of the Basra Gas Company.

Iraq would have a 51 percent stake in the company, Shell would get 44 percent, and Mitsubishi 5 percent.

Bouaziz said the deal might soon help resolve the chronic problem of power shortages. He added that natural gas that's not needed domestically would be exported to other countries.

Iraq, however, still has not approved an oil and gas law. Disagreements between political blocs about the bill have festered since 2007 when the legislation was first proposed. It is especially opposed by officials from the Kurdish region.

After several recent cabinet meetings on the bill, parliament is due to receive it after it is amended by the Oil Ministry.

Former Oil Minister Ibrahim Bahr al-Ulum, who took part in many meetings about the draft law, told RFE/RL that it was crucial for politicians to also agree on reviving the National Oil Company.

He said it would supervise all things related to the oil and gas sector in Iraq.

But Oil Minister Luaybi is opposed to bringing back the National Oil Company because he said it would overlap and impede the work of his ministry.

Hassan Bayazid, a Kurdish member of parliament's Oil and Gas Committee, also rejected the National Oil Company idea. He said it would be better to agree on the draft law on oil and gas before recreating a monitoring company.

Iraq established the National Oil Company in the 1960s but merged it with the Oil Ministry in 1987.
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