Subscribe free to our newsletters via your
  Energy News  

Subscribe free to our newsletters via your

Analysis: Iraq, Shell move to gas JV

disclaimer: image is for illustration purposes only
by Ben Lando
Baghdad, Iraq (UPI) Sep 23, 2008
Iraq's Oil Ministry has inked an initial agreement with Royal Dutch Shell to establish a company aimed at utilizing natural gas currently being burned off in Basra province.

The Heads of Agreement, as Shell officials describe it, is a preliminary legal step to an eventual joint venture with the South Gas Co., one of the state-owned oil and gas firms controlled by the Oil Ministry.

"We've in the very, very early days at this stage," said Shell spokeswoman Kirsten Smart. She said the prospective venture is looking solely at gas being flared in Basra province, not increasing gas production via upstream exploration or development of gas reserves not associated with oil. The venture would handle an increase in associated gas as oil production increases.

"Currently there's enough there that we believe in time it could supply the domestic market and over time supply exports," Smart said. "The domestic power supply is the initial focus." The lack of fuel is blamed in part for a lack of electricity in the country.

Iraq has the world's 10th-largest gas reserves, at 112 trillion cubic feet, according to Oil & Gas Journal. But the gas that could feed power plants, petrochemical plants and other domestic sectors, as well as be sent to the global market, is mostly left underground.

Iraq produces 1.1 billion cubic feet of natural gas per day, according to the Energy Information Administration, the data arm of the U.S. Energy Department. Nearly 65 percent is burned, which is called flaring.

The ministry estimates 700 million cubic feet per day is flared from the south of Iraq, most of it in Basra.

Iraq's Kurdistan Regional Government in the northern three provinces is establishing a center to produce gas for domestic uses. Meanwhile, Baghdad is going to allow bidders to develop the Akkas gas field near the Syrian border and is tempting European consumers by pledging gas to the Arab Gas Pipeline and the prospective Nabucco Pipeline through Turkey.

Aside from developing its gas industry, Iraq is also struggling to work out how international oil companies will be allowed into the domestic oil and gas sectors. Iraq nationalized in the 1960s, which is still popular with its citizens. The debate over the role of the international oil industry is partly the reason a draft new oil and gas law is being held up in Parliament.

Without a new law, the ministry is operating under the Saddam Hussein-era rules that gave the ministry a large say in oil policy. It has just renegotiated a development deal with the China National Petroleum Corp. and next month will unveil a list of oil and gas fields it will allow international oil companies to bid on to develop.

Abdul-Hadi al-Hasani, the deputy chairman of Parliament's Oil & Gas Committee, said neither the CNPC nor Shell deal requires Parliament approval.

"There is no law that forbids this agreement," he said.

Very few details of the Shell deal have been released, which doesn't bode well for Iraq's pledge of transparency in the oil and gas sectors.

But the ministry still has time.

"The focus will now be on reaching a final agreement and begin to establish a plan to develop Iraq's future infrastructure and to develop markets, both domestic and for future export," said Shell's Smart. "The preliminary development activities such as engineering studies and asset surveys will commence shortly, and carry on until and after the joint venture company is formed.

"Various Iraqi and international contractors are already on the ground in Iraq working for other companies. We have an agreement with a contractor to complete the asset survey work for us. Other contractors, local and international, will be employed as we progress."

A timeline for this process has not been announced.

Smart played down reports this will cost Shell upwards of $4 billion annually.

"It's too early to talk about figures at this stage," she said. "In terms of next step is preliminary development activities, feasibility studies and asset surveys, and that will commence shortly."

She said it's envisioned that "South Gas Co. will provide assets and Shell injects equity."


Email This Article
Comment On This Article

Share This Article With Planet Earth DiggDigg RedditReddit
YahooMyWebYahooMyWeb GoogleGoogle FacebookFacebook

Related Links
Powering The World in the 21st Century at

Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

Analysis: Oil and Gas Pipeline Watch
Belgrade, Serbia (UPI) Sep 23, 2008
Russian officials traveled to the Serbian capital, Belgrade, Monday to discuss building the South Stream natural gas pipeline from Russia. Moscow's courting of, or aggression against, European nations with key energy assets and pipeline arteries is defining the international agenda, analysts say. The crisis in the Ukrainian government threatens the use of the Odessa-Brody crude oil pipeline with the prime minister and president favoring rival plans.

  • Analysis: Iraq, Shell move to gas JV
  • Analysis: Oil and Gas Pipeline Watch
  • From Sugar To Gasoline
  • Oglethorpe Plans To Build Biomass Electric Generating Facilities

  • Nuclear deals in sight as Indian PM heads to US, France
  • Lithuania eyes Areva, Candu, GE, Westinghouse for nuclear plant
  • Luminant To Submit Application To Expand Nuclear Power Plant
  • India, France close to nuclear cooperation pact: official

  • New Clues To Air Circulation In The Atmosphere
  • Strange Clouds At The Edge Of Space
  • Dutch town tests 'air-purifying' concrete
  • Scientists Search For Answers From The Carbon In The Clouds

  • Stressed trees release aspirin compound, may communicate : study
  • Oil Palm Plantations Are No Substitute For Tropical Rainforests
  • Norway donates up to one billion dollars to save Brazil rain forest
  • Prince Charles calls for 'wartime' effort against deforestation

  • Research Pushes Back Crop Development 10,000 Years
  • GM Crops Protect Neighbors From Pests
  • WHO hits out at China for little transparency in milk scandal
  • 13,000 children hospitalised in China milk scare

  • Americans And Europeans Have Similiar Plug-In Hybrids Plans
  • Iowa State Engineer Works To Clean And Improve Engine Performance
  • General Motors looks for a jolt from electric Volt
  • Tesla to produce zero-emission sedan in Silicon Valley

  • Safer Skies For The Flying Public
  • Chinese airlines fly into headwinds in Olympic year
  • The M2-F1 - An Aircraft Without Wings
  • China's Tianjin building runway for Airbus test flights: report

  • The content herein, unless otherwise known to be public domain, are Copyright 1995-2007 - SpaceDaily.AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by SpaceDaily on any Web page published or hosted by SpaceDaily. Privacy Statement