Iraq expects to sign Shell gas deal within a month

BAGHDAD, Sept 8 (Reuters) - Iraq expects to sign a natural gas deal with Royal Dutch Shell (RDSa.L) within a month, the Oil Ministry said on Monday.

Iraq's cabinet on Sunday approved a preliminary deal between the energy giant and the state-run South Oil Company that covers the venture in southern Basra province.

That followed a proposal by Shell to develop Iraq's natural gas resources, pumping some gas to local markets and exporting the rest via its southern ports, announced earlier this year.

"Now we have approval from cabinet, the Oil Ministry will invite Shell to ink the gas deal in Baghdad within a month," Oil Ministry spokesman Asim Jihad told Reuters.

The establishment of a joint venture would take about a year, but Shell would have to start field work without delay as soon as the deal is signed, Jihad said.

Iraq will hold 51 percent of the venture and Shell 49 percent.

Under the terms of the deal, Shell will construct new gas facilities to process gas released as a by-product of crude oil extraction, Jihad said. Shell will buy some of the gas itself.

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. (Reporting by Ahmed Rasheed; Writing by Tim Cocks; Editing by Michael Urquhart)