Iraq’s gas deal with Shell-Mitsubishi almost finalised

Iraq and Royal Dutch Shell Plc along with its partner Mitsubishi hope to sign a long-stalled $12-billion gas deal on Tuesday to capture and exploit huge volumes of gas flared from Iraq's southern oil fields, the deputy spokesman of Iraq's oil ministry said Sunday.

Iraq's oil ministry, Shell and Japanese project partner Mitsubishi have solved differences that had delayed the joint venture with Iraq's South Gas Co since a draft agreement was struck in 2008.

The joint venture, named Basra Gas Co, would be at the forefront of Iraq's plans to modernise its energy facilities and boost oil exports, which now once again hover around levels seen before the US-led invasion in 2003.

The Iraqi government, which is currently losing 1 billion cubic feet per day of gas through flaring, mostly in the south, will own 51 per cent of the venture.

Iraq's oil ministry had previously warned Shell to finaliae the long-delayed agreement, and had threatened to cancel it altogether. The three-way venture has faced numerous setbacks, including political opposition to any deals until a new oil and gas law was enacted.

Another key dispute concerned the pricing of gas that the joint venture would sell to the Iraqi government for power generation.