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Shell May Score Inside Track on Iraqi Natural Gas Deal

Multinational giant oil firms, including Royal Dutch Shell, BP, United States-based Exxon, China's State-owned China National Petroleum Corp. (CNPC) and Italy's Eni signed technical service contracts to develop three oilfields in southern Iraq in 2009-2010.

A recent contract negotiated between Royal Dutch Shell, Europe's biggest company, and the Iraqi government may soon give a Royal Dutch Shell processing and export project proprietary rights on natural gas discovered in the concessions.

The oil contracts to develop the Zubair, Rumaila and West Qurna 1 fields near Basra oblige the oil multinationals to surrender the natural gas they do not use for reinjection or power generation to Iraq's state-run South Gas Company.

Under terms of the $17 billion natural gas deal, which has yet to be ratified by the Iraqi cabinet, Baghdad has pledged to ensure that these fields supply the Shell-led Basra Gas Company joint venture with all the necessary raw natural gas and natural gas liquids (NGL) it needs, including for an liquefied natural gas (LNG) export plant. The Shanghai Daily reported.

The contract stipulates "SGC (South Gas Co.) shall procure that all raw gas produced from the dedicated fields (other than utilized gas but including all NGL) ... shall, on and from commencement of operations, be dedicated solely to the (the Shell-led Basra Gas Company)  venture."

By. Charles Kennedy, Deputy Editor OilPrice.com



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