Iraq will sign Monday a preliminary gas deal with Royal Dutch Shell PLC (RDSB) worth $3 billion-$4 billion to jointly develop domestic gas infrastructure in the country's south, an Iraqi Oil Ministry spokesman told Dow Jones Newswires.
"The deal will be signed Monday afternoon in Baghdad," Assem Jihad said.
He said representatives from Shell and the Iraqi Oil Ministry including the minister, Hussein al-Shahristani, and senior government officials would be present at the signing ceremony which would take place in the heavily protected Green Zone in central Baghdad.
Jihad said the signing ceremony would be followed by a news conference.
The Iraqi government approved the joint venture between Shell and the state-run South Gas Co. on Sept. 7 that covers three Iraqi southern provinces: Basra, Missan (Amarah) and Dhiqar (Nassiriya).
Iraq will control 51% while Shell will hold the remaining 49% of the venture which will exploit flared associated gas for domestic use and export the rest as liquefied natural gas via the Persian Gulf using Iraq's southern ports or through pipelines.
Shahristani said last week that the deal is expected to produce 5 billion cubic feet of gas a day. Iraq is processing 1 billion cubic feet of gas a day, he added.
Around 700 million cubic feet of natural gas is burned off each day from oil fields in these three provinces because there is no infrastructure to utilize it. The government wants to use the gas for domestic electricity production and export the remainder.
The Iraqi government said that Shell was chosen out of six companies that submitted offers for the project as its plan helped find ways of utilizing Iraqi gas that is currently pumped into the atmosphere, where it causes environmental damage.
The other companies which bid included Chevron (CVX), BGGroup PLC (BG.LN), Eni SpA (E) and COGAS.
Iraq, which has proven natural gas reserves of 3.15 trillion cubic meters, had a daily natural gas production of 1.64 billion cubic feet and 70% of that was flared.