Shell make £11 billion deal with Iraq

Iraq yesterday signed a $17 billion (£11bn) deal with Royal Dutch Shell and Japan’s Mitsubishi to tap natural gas in the south of the country.

The agreement is one of the biggest by the Opec member to develop an energy sector battered by years of neglect and war.

It forms a joint venture to gather, process and market gas from three oil fields in the oil-rich province of Basra. That gas, pumped in conjunction with crude oil, is currently burned off – or flared – due to lack of infrastructure.

The 25-year joint venture is called Basra Gas Company. Iraq will hold a 51 per cent stake, to Royal Dutch Shell’s 44 per cent and Mitsubishi’s 5 per cent holding. The gas will be used mainly for domestic energy needs, but there is also an option for exports.

Iraq’s oil minister, Abdul-Karim Elaibi, hailed the signing as a “historic turn in Iraq’s oil industry”.

Shell chief executive Peter Voser said Iraq is now a “substantial part of Royal Dutch Shell’s portfolio in the Middle East”.

Source: The Scotsman