The United Nations Development Programme (UNDP) and Shell Iraq have signed an agreement to implement a range of development projects in Southern Iraq. The four year partnership aims to increase the number of local area development activities, promote local small and medium enterprises and provide vocational training to respond to the private sector’s needs.

“UNDP believes that such partnerships are fundamental for the effective implementation of our development programmes in Iraq” said Peter Batchelor, UNDP Iraq Country Director. “Partnering with the private sector, particularly with international oil companies who are the largest investors in the country, is key to capacity building, generating employment and building strong and competitive inclusive markets” he added.

The partnership, the first between UNDP Iraq and the private sector, has two main components. The first includes vocational training to equip existing and future Iraqi workers to respond to the needs of the oil and gas sector. It also includes providing support for the establishment and development of micro, small and medium enterprises. The second includes a range of programmes to improve the quality of basic services for the residents of Basra province. This will be achieved through more inclusive and participatory planning processes, where local communities and civil society organisations are able to identify their own development needs and priorities.

Unemployment in Iraq is currently 11.5% of the labor force, slightly less than in recent years. More than 20% of Iraqi youth are unemployed, while at least one in every five women participating in the labor force is unemployed. In the Basra governorate, unemployment is 11 %.

Shell has announced that it has granted a $63 million contract to build an electricity generation plant for its gas capture project southern Iraq to Swiss engineer ABB Ltd.

Jasser Hanter, general director of the Shell gas project, told reporters that ABB will build two 25 megawatt power plants at Khor al Zubair.

The $17 billion Basra gas project led by Shell and Mitsubishi aims to harvest natural gas that is now flared off by Iraq’s oil production and use it to generate electricity.

(Source: Reuters)

Dow Jones reports that Shell Lubricants, a subsidiary of Royal Dutch Shell PLC, has signed a contract with a local Iraqi company to distribute Shell lubricants in the Iraqi market.

The deal with Mared Iraq, a subsidiary of Malia Group, was signed in Erbil on Monday.

Neither side gave an indication of the value of the contract.

Mared Iraq also distributes British American Tobacco brands (Kent, Craven A, Dunhill, Rothmans, Viceroy), and Mars brands (Mars, Snickers, Bounty, Galaxy, M&Ms)

(Source: Dow Jones)

Iraq’s Majnoon oilfield should be ready to produce 175,000 barrels per day (bpd) by the end of 2012, triggering cost recovery and service fee payments.

Iraqi officials say the field could even reach that output, from current production of around 54,000 bpd, by August, depending on pipeline infrastructure, completed wells and also visa delays for foreign contractors.

Three rigs are working at Majnoon, which hit as high as 90,000 bpd output in December 2010, but work on a de-gassing station has temporarily reduced production.

Shell and its minority partner Petronas of Malaysia, are targetting production of 1.8 million bpd by 2017.

Ole Myklestad, Shell’s manager at Majnoon, told Reuters on Tuesday that they had spent around $1 billion since taking over the field in 2010, and planned to invest another $1 billion this year alone. Total spending over the 20-year life of the project would be around $50 billion.

Mine clearance had required more effort than originally planned, with $30 million spent on it so far, and another $20 million planned this year.

With reserves of 12.6 billion barrels, Majnoon is one of Iraq’s major fields.

(Source: Reuters)

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• Iraq again delays 4th bid round auction: Bigger news is Exxon’s re-entry onto list of bidders.

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• Maliki advisor: oil law pushed to late 2012: Not necessarily surprising, but underlines that Kurds are building facts on ground, rather than relying on promises in Baghdad.
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Dow Jones reports that the gas capture project with Shell and Mitsubishi in Southern Iraq is expected to start production this year.

The head of the South Gas Company, Ali Hussein Khudhier, told the news agency that they expect to produce 50 Mcfd of gas this year.

He added that the floating LNG plant and terminal to be built off the Basra coast is expected to cost around $3 billion, and should be operational in 2017 or 2018. The project would export 600 MMcfd of gas in the form of LNG.

The consortium will soon invite international companies to tender to build the LNG facility.

Before this deal, Iraq was producing around 450 million cubic feet a day of gas from Rumaila, West Qurna Phase 1 and Zubair, but within two years Khudhier expects to also be capturing the 1.1 billion cfd that are currently flared.

Under the agreement, Iraq has to supply the Basra Gas Company with at least 2 Bcfd of raw gas even if it has to bring it from other fields, but it is expected that gas output from these three fields will exceed 2 billion cubic feet a day at full production.

(Source: Dow Jones)

Vinson & Elkins and Cleary Gottlieb Steen & Hamilton are advising Iraq’s oil ministry in a $17.2 billion deal with Royal Dutch Shell and Mitsubishi to develop the infrastructure required to process natural gas in the southern part of Iraq.

The transaction agreements, which were signed on 27th November, came as Iraq attempts to rebuild its oil and gas industry following years of sanctions and conflict.

The 25-year contract, one of the biggest deals that Iraq has signed in recent times, will see the creation of a new company, the Basra Gas Company (BGC).

The BGC will process gas from three large fields near Basrah in Southern Iraq in order to satisfy domestic consumption requirements, and will also have the right to pursue a Liquefied Natural Gas (LNG) or other gas export project for any remaining gas.

The Vinsons team includes partners Christopher Strong and Ahmed el-Gaili, while the Cleary Gottlieb team includes partners Andrew Bernstein and Gamal Abouali. “We are thrilled to be working with the Ministry on such an innovative and large-scale project,” said Ayman Khaleq, Middle East managing partner at Vinson & Elkins, in a statement.

“The signing… was a key milestone for this deal, which is significant to the overall gas industry in Iraq, and it’s a privilege to be a part of that.” 

(Source: Legal Business Online)

Officials in Basra are reportedly trying to cancel a $17 billion Shell gas deal because they want a bigger say, highlighting the pressure on central government to ease its control over the provinces.

According to the report from Reuters, the province is increasingly restless with the slow pace of development and wants more control over its natural resources and revenues.

Demands for more provincial power have simmered for years in Iraq, split by ethnic, sectarian and tribal tensions, but the Basra push and an autonomy drive from Salahuddin [Salahadin, Salah ad Din] province threaten to stir tensions as the last U.S. troops withdraw.

The contract with Shell and Mitsubishi to capture flared gas in three southern Iraqi oilfields was signed on Nov. 24 despite objections from the Basra local council that it was not included in talks or the deal’s signing.

Officials from the Basra Provincial Council filed a lawsuit against the Iraqi Oil Ministry on Nov. 25 demanding the cancellation of the gas agreement.

“In principle, we don’t have any problem with developing the gas but when the contract is signed, there has to be an article that shows the provincial council has agreed … Unfortunately, we did not know anything about this contract,” said Sabah al-Bazouni, head of the Basra Provincial Council.

“Basra is the most suitable province to become an autonomous region.”

Regional autonomy would give the province more power over finances, administration and laws, and an upper hand in supervising public property, which could loosen Baghdad’s grip on the oil and gas sector.

The legal case is unlikely to deter Shell and delay the project, but it raises concerns about future disputes over oil and gas rights in Iraq, which is struggling to rebuild after years of violence just as Washington prepares for a full troop withdrawal by the end of December.