Jul 12 2011 |
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UPDATE: Iraq Oil Minister, Shell Confirm Preliminary Gas Accord
Tuesday, Jul 12, 2011
(Adds Shell confirmation in paragraphs 4-5, additional background and details throughout)
By Hassan Hafidh
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--Iraq's Oil Minister Tuesday and oil giant Royal Dutch Shell PLC (RDSA) reached a preliminary accord on a long-stalled $12 billion gas deal to capture and exploit associated gas from southern Iraq oil fields.
"The Iraqi Oil Minister Abdul Kareem Luaiby announced today that Iraq has signed an initial contract with Shell and Japan's Mitsubishi Corp. (8058.TO) to develop gas production in southern Iraq," the Iraqi statement said.
The long-delayed agreement is important to Iraq's goals of boosting long-term oil production, because of the need to produce "associated" natural gas produced concurrently with rising oil output.
The two sides signed an initial agreement in 2008 to begin negotiations, but the talks have been delayed mainly over the pricing of produced gas that the joint venture would sell to the Iraqi government for much-needed power generation in Iraq. It wasn't immediately clear Tuesday how the agreement resolved the long-standing impasse.
The deal concerns the huge volumes of gas from three giant southern oil fields: Rumaila, Zubair and West Qurna Phase 1.
Deputy Oil Minister Ahmed al-Shammaa, who was present at the signing ceremony, said that the deal would help to increase Iraq's gas production to more than 2.5 billion cubic feet a day.
Iraq, holder of the world's 11th gas reserves, produces some 1.5 billion cubic feet a day, with half of that amount is being flared daily, because of lack of infrastructure to produce and market the gas.
-By Hassan Hafidh, Dow Jones Newswires; +962 799 831 831; hassan.hafidh@dowjones.com
Dow Jones Newswires
(END) Dow Jones Newswires
12-07-11 1132GMT
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