Shell wins $4BN Iraqi government gas deal

Wednesday, 19 November 2008

Oil major Royal Dutch Shell has signed a $4bn deal with the Iraqi government to make commercial use of Iraqi gas.

Shell will have a 49 per cent stake in the joint venture,which will look to sell gas in Iraq and abroad, with the Iraqi Oil Ministry holding the remainder.

It is the first such deal signed since the US-UK led invasion of Iraq in 2003 and is a sign of the improved security and political climate there.

Steven Neely, chief executive officer of the Iraq Economic Development Group, told Pathfinder Business that the Iraqi government needs to spend between £100bn-£150bn over the next five years on oil infrastructure to get near capacity.

He said businesses should follow Shell's lead and invest in Iraq now if they want to make the biggest profits out of the country's reconstruction, adding that opportunities existed in all sectors, not just oil and gas: ‘It is everything. All the essential products and services which make an economy grow. Iraq will be looking to spend over £150bn in the next five years on other areas such as agriculture, industry, housing, technology and water projects.’

Neely added that the Iraqi government is ‘almost begging’ to attract investment from foreign businesses.

‘The investment laws are very favourable to foreign ownership. There are no taxes for 10 years and land is available for special projects,’ he said. However investors should be cautious of the continued cost of security and the need to use an Iraqi partner.

‘Due diligence is very difficult to do there,’ Neely said. ‘However the opportunities are available and the highest period of profitability is right now.’

Italy wins special rights in Libya
Libya is to grant Italy investment privileges in oil, gas and other businesses to reward it for compensating Tripoli for its colonial rule of the North Africa state.

Colonel Muammar Gaddafi said Italy would be given priority in investments because it is a friendly state. Italy has signed a deal to pay $5bn in compensation for ‘misdeeds’ during its 1911-1943 colonial rule.