Eric Watkins
Oil Diplomacy Editor
LOS ANGELES, Sept. 22 -- Iraq has signed a multibillion dollar natural gas deal with Royal Dutch Shell PLC, the second major energy deal agreed with a foreign firm since the US-led invasion in 2003.
Under the agreement, Iraq will control 51% while Shell will hold the remaining 49% of the venture which will exploit flared associated gas for domestic use and export the rest as LNG or through pipelines.
Oil Minister Hussain al-Shahristani last week said that the agreement is expected to produce 5 bcfd, up from the current output of 1 bcfd.
Earlier this month, Iraq approved Shell's Iraq Gas Master Plan, paving the way for the firm to invest some $3-4 billion to gather 500-600 MMcfd of associated gas in the southern part of the country (OGJ Online, Sept. 8, 2008).
Meanwhile, an Iraqi parliamentarian said the country's recently signed contract with China to develop the Ahdab oil field cannot be ratified until the former agreement, signed during the rule of Saddam Hussein, is canceled.
Ali Hussein Ballo, head of the oil and gas committee at the Iraqi parliament, said Saddam Hussein enacted a law legalizing a contract his regime signed with China National Petroleum Corp to develop the Ahdab oil field in 1997.
Ballo said from a legal standpoint, the new agreement cannot be signed until the old one is canceled. Apart from that, he said, the CNPC contract is valid and doesn't need parliamentary approval.
The Iraqi cabinet earlier this month approved the $3 billion oil service contract with CNPC to develop the Ahdab oil field. Shahristani initially signed the deal in Beijing in August.
Contact Eric Watkins at [email protected].
