Iraq approves preliminary gas deal with Shell

BAGHDAD, Sept 7 (Reuters) - The Iraqi cabinet has approved a preliminary natural gas deal between Royal Dutch Shell RDSa.L and the state-run South Oil Company, the government spokesman said on Sunday.

Spokesman Ali al-Dabbagh said in a statement that “the cabinet had approved a preliminary agreement with Shell company for investment in flaring gas in Basra province in a partnership between Shell and the South Oil Company.”

Iraq said earlier this year that Shell had submitted a proposal to develop Iraq’s natural gas resources, planning to supply the local market and export through its southern ports or through a pipeline.

Iraq, with the world’s third largest proven oil reserves, has said it will prioritize development of its southern gas reserves and could become a major supplier to Europe.

Oil Minister Hussain al-Shahristani, in an interview with Iraqiya state-run television broadcast on Sunday, said a major natural gas contract would soon be announced.

“The negotiations lasted for six months, and will achieve for Iraq what was beyond expectations,” Shahristani said.

Shell has also been in talks with Iraq on a short-term technical service oil contract, one of half a dozen Iraq has said it hopes to finalise before it brokers long-term deals to exploit its massive, easily accessible oilfields. (Reporting by Ahmed Rasheed and Mohammed Abbas; Writing by Missy Ryan; Editing by Quentin Bryar)