BAGHDAD, July 13 (UPI) -- Japan's Mitsubishi Corp. and Royal Dutch Shell signed a preliminary deal to produce natural gas from oil fields in southern Iraq, the government announced.
Iraqi Oil Minister Abdul Kareem Luaiby said Shell and Mitsubishi signed a preliminary $12 billion deal for gas production, The Wall Street Journal reports.
Baghdad said the arrangement at the oil fields in the south of Iraq would help the country boost natural gas production from 1.5 billion cubic feet per day to more than 2.5 billion cfd. Much of the natural gas associated with oil fields in the south is flared off because the country lacks production infrastructure.
The government sells natural gas to the electricity ministry at a subsidized rate. The two energy companies said they would like to sell the gas at the international market rate.
The two companies under the deal would also agree to increase oil production at the Rumaila, Zubair and West Qurna Phase 1 fields, the Journal adds.