After waiting more than three years, Iraq has finally signed a $17bn deal with a consortium led by UK-Dutch oil major Shell to capture and utilise natural gas currently flared from its southern oil fields.
The 25-year agreement will lead to the formation of the Basra Gas Company joint venture. State-owned South Gas Company will hold a 51 per cent stake, Shell holds 44 per cent and the remaining 5 per cent goes to Japan’s Mitsubishi.
The company will collect at least 2 billion cubic feet a day (cf/d) of associated gas from four fields in the south of the country; Rumaila, Zubair, along with West Qurna Phases 1 and 2.
Shell signed a heads-of-agreement with the Iraqi Oil Ministry in September 2008, but the deal has been plagued by controversy since it was first announced. A number of politicians criticised the initial plan for being too comprehensive and for awarding a single international group a monopoly over gas resources in the south of the country, something Shell denies.
It also drew criticism due to the proposed export of liquefied natural gas at a time when Iraq continues to suffer from power shortages.