Royal Dutch Shell PLC and Japan's Mitsubishi Corp. have signed an initial deal with Iraq to tap natural gas in the country's south, an oil executive said Tuesday, the latest push to develop Iraq's energy sector battered by years of neglect and war. The deal, which Iraqi officials have said is worth between $12 billion to $17 billion, sets up a joint venture firm to gather, process and market associated natural gas in the oil rich province of Basra. It's seen as a key part of the government's strategy to boost power generation in a nation where chronic electricity outages have at times led to violent protests. Shell's Vice President for Middle East and North Africa Mounir Bouaziz told The Associated Press the deal was signed in Baghdad and would be sent to the Cabinet for final approval. Iraqi official were not immediately available for comment. Unlike other energy deals Iraq signed with international energy companies since the 2003 US-led invasion, Tuesday's deal was signed behind closed doors. The Oil Ministry first invited the media on Monday, but later said the signing ceremony was postponed. No explanation was provided for the change in the plan. The joint venture is called Basra Gas Company. Iraq will hold a 51 percent stake to Royal Dutch Shell's 44 percent and Mitsubishi's 5 percent share. The signing marks a vital development in a project that has been bogged down in legal issues since Iraq and Shell signed a memorandum of understanding in September 2008. Iraq burns off almost half of the 1.5 billion cubic feet per day of gas that it produces and the 25-year-development deal would help the country capture more than 700 million cubic feet per day of gas from three southern oil fields.
