Shell, Iraq seal $4 billion gas deal

Royal Dutch Shell has formally signed a gas joint venture with an Iraqi state-owned company estimated to be worth four billion dollars, a top government oil official said on Tuesday.

The Anglo-Dutch becomes the first Western major to enter Iraq through a deal with Baghdad after nearly four decades.

A delegation from Shell arrived in Baghdad on Monday and signed the agreement with South Oil Co, oil ministry spokesman Assem Jihad told AFP.

The venture, in which the Iraqi government will hold 51 percent and Shell the balance, will extract gas from oilfields in the southern city of Basra.

While it is expected to be worth around four billion dollars (2.8 billion euros), the exact commitments by the two parties are yet to be finalised.

Last week, Oil Minister Hussein al-Shahristani told AFP Iraq's stake in the venture would be the facilities and equipment already in place and that a cash injection would come from Shell.

“These (existing facilities and services) will be valued by an independent third party,” Shahristani said.

The venture will pay international market prices for the 20 million cubic metres (706 million cubic feet) of gas it captures daily from the Basra oilfields, he said.

It will process the gas and supply it in local markets to industrial companies like fertiliser and petrochemical plants as well as export it, Shahristani said.

Former dictator Saddam Hussein threw out foreign oil companies after he nationalised the sector in 1972.

Since Saddam's execution in 2006, a number of foreign majors have signed contracts with the country's northern Kurdish government, but none with the central government until now.