Iraq approves deal to exploit gas from southern oil fields

22:18, June 29, 2010      

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The Iraqi government approved on Tuesday a joint venture deal with Royal Dutch Shell PLC and Japan' s Mitsubishi to exploit by-product natural gas in the country's southern oil fields, a government spokesman said.

The deal is designed to exploit the natural gas in the Basra region that currently being burned off at three oil fields of Rumaila, Zubair and West Qurna Phase One, with a target to export 600 million cubic feet per day, Ali al-Dabbagh said in a statement.

According to the deal, the Iraqi government will hold 51 percent of the venture's share, and Shell will have 44 percent while the Mitsubishi Corp. will keep 5 percent, Dabbagh said without giving a date for the final signing.

Iraq has proven reserves of 112 trillion cubic feet of natural gas, but because of the poor infrastructure of the oil and gas industries, the country is only producing 1.5 billion cubic feet a day.

Shell has already signed contracts with the Iraqi government to develop supergiant oil fields of Majnoon and West Qurna Phase One in the southern province of Maysan.

Shell's oil contracts were part of 10 contracts signed with the Iraqi government to develop 10 oil fields in two auctions last year that aimed at giving the country the potential to increase its oil output capacity, which is currently at roughly 2.5 million barrel per day (bpd), to be 12 million bpd in six or seven years.

Iraq mainly depends on oil revenues as the country has the world's third-largest proven oil reserves estimated at 115 billion barrels, following Saudi Arabia and Iran.



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