Royal Dutch Shell and the Iraqi government have finally inked a deal that will see the international oil company capture associated gas from the country's southern oilfields.
Iraq and Shell sign oilfield gas deal
Royal Dutch Shell and the Iraqi government have finally inked a deal expected to enable the international oil company to capture associated gas from the country's southern oilfields, providing Iraq with the feedstock to satisfy its electricity needs.
Abdul Kareem Luaibi, the oil minister, signed the contract with the Anglo-Dutch oil major yesterday. The company is expected to invest about US$17 billion (Dh62.44bn).
The contract signing had been delayed over disputes on pricing of the gas and disagreements within the Iraqi government on the lack of a competitive tender.
Shell will process 700 million cubic feet a day (cfd) of gas from the Rumaila, West-Qurna-1 and Zubair fields in the first stage of the project.
To offset investment costs, Shell will be allowed to construct a liquefied natural gas (LNG) terminal on Iraq's coast before the end of the decade, and sell LNG to the international markets.
Iraq is faced with a severe shortage of electricity, and needs to find feedstock for an expanding power generation base. Demand of more than 11,000 megawatts in the second quarter of this year was met with only 6,500MW.
The government's electricity masterplan calls for investment of almost $77bn over the next 20 years.