Iraq has signed an 25-year agreement valued at $12.5bn with Royal Dutch Shell and Mitsubishi to capture natural gas currently being flared in oil fields in the country’s southern region (Rumaila, Zubair, and West Qurna Phase 1), through the joint venture Basrah Gas Co. The Iraqi government will hold 51% of Basrah Gas, while Shell will hold 44% and Mitsubishi 5%.
The deal still must be approved by the Iraqi cabinet while several significant issues have to be resolved. For instance, since 2008 when the two sides signed an initial agreement, talks have been delayed, mainly over the pricing of gas sold to the Iraqi government for power generation in the country. Currently, the oil ministry sells the gas to the electricity ministry and other government entities at subsidised rates, while Shell and Mitsubishi wanted the gas to be sold at prices that match international standards.