Shell to sign up with Baghdad and retreats from Erbil

[Stillw8n]

Shell to sign up with Baghdad and retreats from Erbil

Erbil, Nov. 17 (AKnews) – Royal Dutch Shell is pulling out of talks with the Kurdistan Regional Government (KRG) in a bid to protect its lucrative contracts with Baghdad, reports the Financial Times.

The Anglo-Dutch supermajor has concluded a $17 billion USD, 25 year deal with the Iraqi Government in conjunction with Mitsubishi to collect the vast supplies of wasted natural gas from the country’s southern oil fields.

The Iraqi Council of Ministers agreed to a a deal with the international companies to establish the Basra Gas Company, a public-private partnership seeing Baghdad take a 51% stake, Shell 44% and Mitsubishi 5%.
Shell, like other supermajors operating in Iraq, has been unwilling to deal with the KRG for fear of upsetting Baghdad and losing the lucrative contracts in the south.

In recent days the Iraqi federal government has threatened Exxon Mobil Corp. with cancelling its contract to exploit the vast West Qurma oil field near Basra after the Texan energy giant signed an exploration contract with the KRG last week.

While the Iraqi cabinet has agreed to the deal with Shell and Mitsubishi no contract has been signed. The Financial Times reports the different parties could put pen to paper and seal the deal as soon as next week.

The deal will allow the international companies to exploit 700 million cubic feet of gas per day from the Rumaila, Zubair and West Qurna fields. Iraq’s dilapidated energy infrastructures mean the gas has to be flared off its oil fields at present. This means one billion cubic feet of gas is burnt up each day across the country.

The gas instead will be used to fire a new power station and surplus will be exported. Excess will be sold internationally via a liquefied natural gas export facility worth $4.4 billion USD to be built the Southern Gas Company deal. Only Qatar has significant gas export capacity in the Gulf region.

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