A top Iraqi government energy committee has approved a deal with Royal Dutch Shell to capture and exploit gas from its giant southern oil fields.
The Iraqi oil ministry struck a deal in July with Shell and Japan's Mitsubishi Corp. to develop gas production in southern Iraq. The deal still needs cabinet approval.
"It was agreed upon by the energy committee and was sent to the cabinet for approval," Oil Minister Abdul-Karim al-Luaibi said, according to Dow Jones,
The committee is chaired by the deputy prime minister for energy affairs, Hussein al-Shahristani, and its members include the ministers of oil, electricity and finance.
Luaiby declined to estimate when he thought the cabinet would approve the contract, The agreement must first be examined by the cabinet's legal and specialied offices.
The passing of the BGC deal by the cabinet's energy committee means that one of the largest hurdles has been passed for the deal. According to IHS Senior Middle East Energy analyst Samuel Ciszu, "it is now less likely that it will fall on opposition, after having been endorsed by the energy committee and being so closely linked to the important power sector revival."
The 25-year venture calls for an investment of US$17.2 billion to create the Basra Gas Company. Baghdad would have a 51 per cent stake, Shell 44 per cent and Mitsubishi 5 per cent.
Some US$12.8 billion would be spent on infrastructure and US$4.4 billion on construction of a liquefied-natural-gas facility.
Under the agreement, the company must first meet local demand but can export any gas not used by Iraq's fuel-starved power plants. The planned LNG terminal would handle the export of 600 million cubic feet a day.
The venture would process associated gas produced from three supergiant Iraqi fields--Rumaila, West Qurna phase 1 and Zubair--all in Basra governorate.