Nov. 21 (Bloomberg) -- Iraq will sign a final accord on Nov. 27 with Royal Dutch Shell Plc and Mitsubishi Corp. for a $17 billion project to capture natural gas from fields in the south of the country, according to the Oil Ministry.
The signing was delayed by three days for logistical reasons, Asim Jihad, a ministry spokesman, said by telephone from Baghdad today. The agreement was due to be signed Nov. 24, Deputy Oil Minister Ahmad al-Shamaa said last week.
According to the terms of the 25-year agreement, the government will have a 51 percent stake in the venture known as South Gas Co., while Shell will get 44 percent and Mitsubishi the rest. South Gas will have a starting capital of $20 million and will help collect more than 2 billion cubic feet (57 million cubic meters) a day from the Rumailah, Zubair and West Qurna fields, Shamaa then said.
Iraq, holder of the fifth-biggest gas reserves in the Middle East, is struggling to restore power capacity after years of conflict and economic sanctions. The captured gas will meet domestic needs and may be exported at a later stage, Hans Nijkamp, Shell’s country chairman for Iraq, said Sept. 29.
Shell, Europe’s largest oil company, has been in talks with the Iraqi government since 2008 to gather gas that’s currently burned off, or flared.
Iraq has signed 15 licenses for the development of energy resources, including three for gas, since 2008, five years after the U.S.-led invasion that ousted the regime of then-President Saddam Hussein. It plans a fourth licensing round of oil and gas exploration rights for March.
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