BAGHDAD: The Iraqi Oil Ministry says it's near to finalizing a $12 billion natural gas contract with Royal Dutch Shell as Baghdad prepares to auction three major gas fields in its accelerating drive to become one of the world's top energy producers. Oil Minister Hussein Al-Shahristani said Wednesday in Vienna, where he attended a meeting of the Organization of Petroleum Exporting Countries, that the Cabinet was ready to sign the deal as soon as the ministry submits the paperwork. Under the deal, Shell will have a 44 percent stake in the joint venture with Mitsubishi Corp. of Japan holding 5 percent, ministry officials say. Their Iraqi partner, the Iraqi South Gas Co., will hold a controlling 55 percent. Baghdad has seen its oil production steadily improve since foreign companies secured 20-year production contracts in two auctions in 2009. Now it wants to repeat that process for natural gas, which Baghdad is pushing to develop to provide fuel to generate electricity and for export, particularly to the European Union, which wants to reduce its dependence on Russian gas. Al-Shahristani said that 13 foreign companies, most of which qualified for the two rounds of auctions for 10 of Iraq's major oil fields in 2009, have tendered bids for the Oct. 20 gas field auction. It has been delayed twice, apparently because the companies didn't find the terms favorable enough. The companies involved reportedly include Total of France, TNK-BP Holding of Russia, Kogas of South Korea and Eni of Italy. The ministry is reported to have made its conditions more attractive by scrapping “signature bonus” payments amounting to several hundred million dollars by those companies who secured deals in earlier auctions. On offer next week are the Akkas, Mansouriya and Siba fields, which hold combined reserves estimated at 11.23 trillion cubic feet of gas. Akkas, in Anbar province near the Syrian border in the northeast, holds an estimated 5.6 trillion cubic feet of gas. Mansouriya, with reserves of 4.5 trillion cubic feet, is in the violence-plagued province of Diyala. Siba, the smallest of three with 1.1 trillion cubic feet of reserves, is in Basra province in the southeast.
