Baghdad: Royal Dutch Shell Plc said Tuesday that Japan’s Mitsubishi will take a 5% stake in a planned joint venture it has with Iraq to produce natural gas in the south of the country.
Financial terms were not disclosed.
Shell and the Iraqi oil ministry’s South Gas Company agreed in September to set up the South Gas Utilization Project joint venture to invest in gas production in the southern oil-rich province of Basra. The deal was Iraq’s second with a foreign company since the US-led invasion in 2003.
Iraq flares about 700 million cubic feet of gas every day from its oil production sites. Projects like the Shell venture aim to capture and commercialize the fuel for domestic use and export.
The country estimates it loses about $40 million worth of natural gas each day, partly because of a lack of infrastructure.
Iraq has the world’s third-largest known oil reserves with an estimated 115 billion barrels, but its production is far below its potential due to decades of war, UN sanctions, lack of foreign investment and insurgent attacks.
It also sits on an estimated 112 trillion cubic feet of natural gas reserves, according to the ministry.