Royal Dutch Shell PLC and the Iraqi government are nearing a deal to build an $11-billion petrochemical facility in southern Iraq, according to the government here, the latest large-scale move by the oil major into Iraq's energy sector.
Royal Dutch Shell PLC and the Iraqi government are nearing a deal to
build an $11-billion petrochemical facility in southern Iraq, according to the
government here, the latest large-scale move by the oil major into Iraq's
energy sector.
Shell has already invested heavily in helping
Iraq
exploit its bountiful crude and natural-gas reserves. The company has been
developing
Iraq
's
giant Majnoon oil field, which produced its first oil last month and is now
pumping some 200,000 barrels a day, according to
Baghdad
.
Shell also signed a $17.2-billion deal last year to collect natural gas from
Iraq
's
southern oil field production. The gas has traditionally been flared, or burned
off, and
Iraq
has
long had ambitions to collect and use the gas to meet domestic energy demand.
The intention to move forward with a petrochemical plant follows a meeting
between Iraqi Prime Minister Nouri al-Maliki and Shell Chief Executive Peter
Voser in
Baghdad
late
Tuesday. The government said in a statement following that meeting that it was
about to sign a "heads of agreement," committing both sides to early
planning for the project.
"The heads of agreement will be ready for signing within weeks," the
statement said. The two sides have been working on such a project since signing
a previously unreported memorandum of understanding in April 2012, according to
a person familiar with the situation. The project is being called Nebras,
Arabic for "beacon of light." The project envisions an
ethane-cracking unit that would produce ethylene, a compound used in making
plastic.
Shell already has a big presence in
Iraq
,
where it is developing the huge Majnoon oil field, near
Basra
. It,
and a number of other global energy companies, won the rights to develop
several fields to help the country jump start its oil industry, laid low by
looting and sabotage following the U.S.-led invasion in 2003. The industry had
also suffered years of neglect and sanctions under Saddam Hussein.
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