Mitsubishi to join Iraq gas deal
February 16, 2009
The Iraqi Oil Ministry announced Mitsubishi Corp. is joining Royal Dutch Shell PLC in its joint venture with Iraq to tap natural gas in the country''s south, as reported by the Associated Press. Iraq and Shell signed a preliminary deal last September that paves the way to establish a joint venture to gather, process and market associated natural gas in the oil-rich province of Basra. The gas is currently flared due to lack of sufficient infrastructure. The initial deal allocated 51 percent of the joint venture to Iraq''s South Gas Co. and 49 percent to Shell. Iraq has not provided details on Mitsubishi''s share in the deal. Officials said at the time of the September signing that they hoped to sign a long-term, multi-billion-dollar deal within a year, a period in which Shell was to survey the volume of flared gas, determine the capacity of existing infrastructure and draw up plans to refurbish them or buy new ones. The project will initially serve domestic energy needs and plans to export surplus gas in the future. The Iraqi government has signed one other major deal with an international energy company since the U.S.-led invasion in 2003. The deal with Shell was approved by the Iraqi Cabinet but has drawn significant criticism in the country. The parliament''s oil and gas committee has accused the Oil Ministry of a lack of transparency when it signed the deal on a no-bid basis and has said the deal will allow Shell to monopolize natural gas resources in southern Iraq. Oil Ministry officials have defended the deal as the best way for Iraq to invest in natural gas that would otherwise be wasted. Officials have made public appearances and run advertisements highlighting how much money Iraq loses by flaring gas and why Shell was chosen as a partner. Iraqi officials have said approximately $40 million worth of natural gas is lost each day because it is either re-injected into wells or burned due to a lack of sufficient infrastructure to exploit it for consumption or export.