Iraq Likely to Sign Shell Gas Deal by End of 2010

Iraq is meeting with Royal Shell Dutch to finalise a draft of a $12 billion deal to develop a gas-structure project in southern Iraq, and may sign a deal by the end of this year, a senior Iraqi oil official told Dow Jones Newswires on Tuesday.

“There is a meeting being held in Basra to agree on a final draft contract,” Asri Mousa, an Iraqi Oil Ministry technical advisor said. It could be the last meeting before sending the draft to the cabinet for approval.

“We are expecting to sign the project with Shell by the end of this year,” he said.

Asked why the project was delayed, Mousa said the two parties needed to agree on some legal wording of the draft contract and they had done so.

As we reported last month, the Iraqi cabinet delayed the finalisation of the project with Shell and Japan’s Mitsubishi Corp. to capture gas from Basra’s oilfields because of legal issues related to the joint venture. The cabinet already had approved the planned investment in June, but it is now waiting to sign the final draft once it is resubmitted by the oil ministry.

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