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The Times: Shell plans gas pipeline venture in Iraq

March 14, 2007
Carl Mortished, International Business Editor

Royal Dutch Shell and a group of Turkish companies have joined forces to bid for a licence to produce natural gas in Iraq and pipe it to the Turkish Mediterranean oil port of Ceyhan.

Talks have taken place with the Iraqi oil ministry regarding a plan to build a gas pipeline that would link Iraq to Turkey and join with Turkish projects to export Central Asian gas nto Europe.

The pipeline was discussed at a meeting last Friday in Istanbul between Iraqi, Turkish and US officials, according to Hilmi Guler, the Turkish Energy Minister. Shell’s partners are believed to include TPAO, the Turkish state oil company; Botas, Turkey’s pipeline operator, and Tekfen, a construction group.

Iraq has huge unexploited gas reserves, estimated to total more than 3 trillion cubic metres, greater than those remaining in the North Sea. At present gas is flared from Iraqi oil wells, a wasteful practice that pumps greenhouse gases into the atmosphere.

A gas link-up between Iraq and Turkey could bring new supplies into Europe, reducing dependence on Russia. The talks in Istanbul were supported by the US State Department. It played a big role in promoting the controversial Baku-Tbilisi-Ceyhan pipeline, which is now delivering Caspian Sea oil into the Mediterranean. A gas pipeline is being built to deliver Caspian gas via the same route into Turkey.

Matt Bryza, US deputy assistant Secretary of State for European and Eurasian affairs, said that the Istanbul meeting was intended to prepare for higher level discussions in the future. “The aim was to introduce the Turkish side to the Iraqis and to reassure them that there was nothing to be wary of in talking to Turkey,” he said.

Shell’s move in Iraq follows the Iraqi Government’s recent approval of a draft oil and gas law, which settles the quarrel between the Kurdistan regional government and Baghdad over who can issue exploration licences.

A Shell spokesman said: “We want to play an active role to help Iraq develop its oil and gas infrastructure.”

Security concerns have prevented multinationals from entering Iraq but several independents, including DNO, the Norwegian company, are drilling wells in Kurdistan, near the Turkish border.

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