Royal Dutch Shell and Iraq have settled most pending legal issues that have delayed a $12bn gas deal for more than two years and an initial pact could be signed mid next week, a senior Iraqi oil official said yesterday.
Since the signing of an initial agreement in 2008 to begin negotiations on the project, the Iraqi oil ministry has been working to finalise a joint venture between its South Gas Co, Shell and Japan’s Mitsubishi Corp to capture and exploit the huge volumes of gas flared from three giant southern oil fields.
The main dispute was over pricing of produced gas that the joint venture would sell to the Iraqi government to fuel much-needed power generation in Iraq.
Under the current system, the oil ministry sells the gas to the electricity ministry and other government entities at subsidised rates but Shell and Mitsubishi wanted the gas to be sold at prices that match international standard. That issue has been resolved but the official didn’t say how.
Once initialled the deal still needs the approval of the Iraq government.
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