In Secret Agreement, Shell Nets 25-Year Monopoly on Natural Gas in Southern Iraq

November 10th, 2008

Via: Raw Story:

Royal Dutch Shell oil company and the Iraqi Oil Ministry have struck a secret, as-of-yet non-binding agreement that gives a monopoly over southern Iraq’s natural gas to the energy giant. It marks the first time in over 35 years a Western oil company has played a major role in the country’s most lucrative industry.

Signed Sept. 22 and obtained by United Press International, the “Heads of Agreement” document — basically a legal framework for a contract — delegates Shell sole access to the reserves for the next 25 years, with an option to extend that term.

Shell says the arrangement gives it exclusive rights to all natural gas runoff produced by oil exploration operations in the southern portion of the country. However, like so many other major industrial contracts coming out of Iraq, the process used to reach an agreement is being questioned.

“There hasn’t been much transparency in this agreement,” said Ali Hussain Balou, chairman of Iraq’s Oil and Gas Committee, in a report by Reuters. “They did not give a chance to another company. We want to know why.”

“It is only a partnership,” Iraqi Oil Ministry spokesman Assem Jihad told UPI. “There will not be a monopoly of the gas.”

The agreement does not allow Iraqi’s the first rights to the natural gas reserves. Under its terms, state-run companies would capture “non-associated gas” discovered during oil exploration, which would then be sold exclusively to Shell for export.

Research Credit: ltcolonelnemo

Leave a Reply

You must be logged in to post a comment.