Shell and Iraq's Oil Ministry Monday signed a "Heads of Agreement," the next step in the plan to form a joint venture to capture gas currently being flared in Basra.
Shell and Iraq's South Gas Co. would split ownership 49 percent to 51 percent, respectively, but very few extra details have been given. Statements by officials from the company and ministry have alluded that the joint venture's scope would be purely on capturing natural gas being flared in the province and utilizing it for domestic needs, and then perhaps export.
"We're in the very, very early days at this stage," said Shell spokeswoman Kirsten Smart. She said it's envisioned that "South Gas Co. will provide assets and Shell injects equity."
"Currently there's enough there that we believe in time it could supply the domestic market and over time supply exports," Smart said. The lack of fuel is blamed in part for a lack of electricity in the country.
"The focus will now be on reaching a final agreement and beginning to establish a plan to develop Iraq's future infrastructure and to develop markets, both domestic and for future export," said Smart. "The preliminary development activities, such as engineering studies and asset surveys, will commence shortly, and carry on until and after the joint venture company is formed.
"Various Iraqi and international contractors are already on the ground in Iraq working for other companies. We have an agreement with a contractor to complete the asset survey work for us. Other contractors, local and international, will be employed as we progress."
South Korea, KRG finalize oil deals
The Kurdistan Regional Government and the Korean National Oil Corp. announced the finalization of oil and infrastructure investment deals.
KNOC will get 80 percent and 60 percent interest in two new production sharing contracts, and either 15 percent or 20 percent in six existing contracts.
KNOC will be required to spend $600 million up front on various infrastructure projects, and another $1.5 billion once crude produced from the oil deals starts being exported.
Petrel Resources says issues over payment, contractor resolved
David Horgan, managing director of the Irish firm, said in a statement that negotiations with the Iraqi Oil Ministry over its work at the Subba and Luhais fields have been successful.
The company had complained that $46 million in payments were delayed in a dispute over which bank it was to be deposited into. Petrel said it was agreed to be a bank outside Iraq, which has a growing and still corrupt banking system.
Petrel was also asked to ditch its partner in the project, an Iraqi Kurd-owned firm called Makman, apparently as part of internal Iraqi politics. That too has been agreed to, Horgan said.
Petrel in 2005 signed a $197 million contract for design, materials and other services to assist the Iraq State Co. for Oil Projects in developing the Subba and Luhais fields in southern Iraq.
KRG takes bids on wind and hydro power, signs electricity deal
Iraq's Kurdistan Regional Government is looking to wind and hydropower to meet its electricity needs.
The KRG Electricity Ministry wants wind farm feasibility studies in all three of its northern Iraq provinces and three hydropower plant feasibility studies. It announced the invitation to tender on its Web site Tuesday, with an Oct. 20 deadline for bidders.
The KRG Electricity Ministry will also pay the Washington, D.C.-based company $33 million for the 132 kilovolt electrical transmission and distribution project that links Aqra, in Dohuk province, to Khabat, in Erbil province.
This is an extension of the Aqra-Dohuk substation project. The company said in a statement that when it's completed, "the network through all KRG governorates will be complete."
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