Japan’s Mitsubishi Corporation has acquired a 5 per cent staked in a venture developing gas resources in southern Iraq.

Under the proposed deal, Mitsubishi will join Shell in gathering 700 million cubic feet a day (cf/d) of flared gas from Iraq’s major southern oil fields.

Shell signed a heads-of-agreement deal with the Iraqi Oil Ministry in September 2008, which is expected to lead to a commercial contract with the state-run South Gas Company (MEED 22:9:08).

The gas deal is the first between an international oil company (IOC) and Baghdad since the US invasion in 2003.

It follows Shell and Mitsubishi’s involvement in the country’s gas masterplan during the past two years (MEED 13:6:08).

The joint venture will purchase associated natural gas from upstream operations, own and operate existing gas gathering, treatment and processing facilities, and invest in repairing non-functioning assets. It will also develop new facilities.

Shell says its initial focus is supplying domestic users with liquefied petroleum gas and natural gas liquids, as well as natural gas supply for power generators and deliveries to local distribution networks.

The companies could develop a liquefied natural gas facility to export natural gas in the future.