A US$12.5 billion agreement between Iraq, Royal Dutch Shell and Mitsubishi Corp. for the capture of flared-off natural gas in Iraqs oil fields in the south will hopefully be signed in January 2011.
The agreement will be signed "either next month or the one after at the most," once legal details are resolved, Ali Hussain Khudair, the director-general of Iraq's South Gas Co. said in December, according to Bloomberg.
The government initially approved the creation of the joint venture with Shell and Mitsubishi to be called Basra Gas Co back in June 2010. The venture would be owned 51 per cent by state-run South Gas, with Shell holding 44 per cent and Mitsubishi the remaining 5 per cent.
The Oil Ministry delayed finalising the deal in September due to legal issues about the joint venture. A foreign consulting firm is working to settle issues related to the venture's establishment, Khudair said, without identifying the company.
The project involves capturing gas initially from the oilfields of Rumaila, being developed by BP and China National Petroleum Corp., Zubair developed by Eni SpA, Occidental Petroleum Corp. and Korea Gas Corp, and West Qurna 1 by Exxon Mobil and Shell.
The joint venture will deal only with the South Oil Company when utilising and buying the gas and will not have direct contact with the international firms developing the three fields.
The majority of Iraq's associated gas, which is pumped in conjunction with crude oil, is flared. The country burns more than 1 billion cubic feet of gas a day, or 10.3 billion cubic meters a year. Shell plans to capture and sell about 700 million cubic feet of gas a day in southern Iraq.
