Business | Oil & Gas
Iraq-Shell deal likely to be delayed until after polls
A final deal between Iraq and Royal Dutch Shell to tap natural gas in southern Iraq is likely to be delayed until after January's national elections, a senior Iraqi oil official said yesterday.
- AP
- Published: 22:56 September 5, 2009
Baghdad: A final deal between Iraq and Royal Dutch Shell to tap natural gas in southern Iraq is likely to be delayed until after January's national elections, a senior Iraqi oil official said yesterday.
A preliminary deal was signed last September to establish a long-term and multi-billion-dollar joint venture within a year to gather, process and market associated natural gas in oil-rich Basra province.
Fifty-one per cent of the joint venture would go to Iraq, 44 per cent to Shell and five per cent to Japan's Mitsubishi Corporation.
Deputy oil minister Ahmad Al Shama'a said the focus on campaigning had complicated efforts to reach agreement, but he expects a final deal from Iraq's next government.
"The current political atmosphere is the one factor that determines more than anything else," he said.
The deal has drawn criticism from parliament's oil and gas committee, which says the oil ministry's selection of partners on a no-bid basis lacked transparency.
The committee's lawmakers also say the deal will allow Shell to monopolise natural gas resources and influence prices. The delay is another sign that Iraq's political wrangling is threatening its hopes for investment in natural resources to fill the national coffers with the badly needed cash.
It could also result in international oil firms looking to invest perceiving Iraq as an unstable partner.
Samuel Ciszuk, Mideast energy analyst for London-based IHS Global Insight, said any progress on the Shell deal is unlikely "unless the parties favouring the deal strengthen their positions in the forthcoming election."
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