Shell Jv To Have South Iraq Flared Gas Monopoly

Iraq would like to use the gas for domestic power generation purposes and export any excess.

Oil major Royal Dutch Shell Plc said its planned gas venture with Iraq's state oil company will have a monopoly on collecting and marketing gas extracted as a by-product of oil production.

Shell spokeswoman Kirsten Smart said in an email that the joint venture would be "the sole associated natural gas gathering, processing, treating and marketing company in the Governate of Basra."

The Anglo-Dutch oil major and Baghdad are finalising details of the plan before a final agreement is signed. The venture will be 51 percent owned by the state-owned South Gas Company and 49 percent by Shell.

Gas is frequently produced as a by-product when oil is extracted, and in places like Iraq, where there are no facilities to capture this associated gas, it is usually flared.

Iraq would like to use the gas for domestic power generation purposes and export any excess.

The agreement in September on the multi-billion dollar project was the first major oil and gas deal the country signed with a Western oil major since the fall of Saddam Hussein.