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Iraq lawmaker says Shell deal lacks transparency

Hemscott: a Morningstar company

By Tim Cocks

BAGHDAD, Nov 8 (Reuters) – The head of Iraq’s parliamentary Oil and Gas Committee said on Saturday he was concerned about a lack of transparency in a flare gas contract which the government has signed with oil major Royal Dutch Shell.

Shell is finalising details of the multi-billion-dollar plan, a joint venture with Iraq’s state-run Southern Gas Company, before a final agreement is signed. An initial deal was signed in September.

Shell says the deal gives the joint venture a monopoly over all of the natural gas collected as a by-product of oil production in Iraq’s rich southern oil fields in Basra.

Some Iraqi politicians have expressed alarm that such a deal could be signed without any tendering process.

‘There hasn’t been much transparency in this agreement,’ Ali Hussain Balou, head of the Oil and Gas Committee, told Reuters. ‘Shell signed this agreement with the ministry … They did not give a chance to another company. We want to know why.’

Oil ministry officials were not available for comment.

Gas produced as a by-product of oil extraction is currently flared off in

Iraq since no facilities exist now to capture it.

Iraq wants to use the gas to generate electricity to ease chronic power shortages, exporting surpluses.

‘It would be better to have competition,’ Balou said. He added that parliament should have scrutinised the deal.

Iraq, which has the world’s third largest proven oil reserves, has said it wants to focus on development of its southern gas fields and could become a major supplier to Europe.

(Additional reporting by Khalid al-Ansary; editing by David Stamp) Keywords: IRAQ/SHELL ([email protected]; Reuters Messaging: [email protected])

8  November  2008
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