In a statement, Iraq said it would be ready to sign a "heads of agreement" for the new facility "within weeks."
The deal to build an ethylene production plant, would be one of several multi-billion projects the company has signed onto in Iraq, including oil field development that is already yielding 200,000 barrels per day in the Majnoon oil fields, The Wall Street Journal reported Wednesday.
Ethylene is used in making plastic.
Shell is also contracted to harvest the country's natural gas, which has long been simply burned off, rather than put to use.
Iraq is now aiming to use the natural gas to meet domestic energy needs, the Journal said.
The natural gas project is valued at $17.2 billion, the newspaper said.
"We continue to work towards signing a Heads of Agreement with the Government of Iraq in due course," a Shell spokesman said in a statement.