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Shell Studies Possible Oil Projects in Iraq, CEO Says (Update1)

Bloomberg 

 

By Edward Gismatullin

Nov. 24 (Bloomberg) — Royal Dutch Shell Plc, Europe’s largest oil company, is examining possible oilfield projects in Iraq as the nation prepares to issue exploration permits next year, Chief Executive Officer Jeroen van der Veersaid today.

Shell may bid for Iraqi fields in the first half of 2009, van der Veer told reporters at a conference in London. Iraq expects to award contracts by June in its first oil-licensing round since the U.S. invasion in 2003, Oil Minister Hussain al- Shahristani said last month.

“They’ve just issued the rules on how to bid,” van der Veer said. “It’s quite complicated; we will study that and of course then we’ll make up our mind on what we are going to do.”

Iraq, holder of the world’s third-biggest crude reserves, pre-qualified 41 companies including Exxon Mobil Corp., Shell and BP Plc to participate in the licensing round. The Hague-based Shell also plans to invest “north of” $1 billion on gas- capturing and marketing projects in Iraq, van der Veer said.

In September, Shell agreed to help Iraq end fuel flaring and reduce pollution. The two parties formed a venture to process and sell so-called associated gas, which is produced in conjunction with crude oil. About 700 million cubic feet of gas is currently flared, or burned into the air, every day in southern Iraq, Shell said at the time.

“This is in itself quite a sizable project,” van der Veer said today. “Don’t expect miracles in the first and second quarters” because it takes time to work out a detailed agreement, he said. Shell will hold 49 percent of the venture and Iraqi South Gas Co. 51 percent.

Turkish Accord

Last week, Shell agreed with Boru Hatlari ile Petrol Tasima AS, the Turkish state-run pipeline company known as Botas, and Turkish oil producer Turkiye Petrolleri AO to study possible gas exploration and export projects in Iraq. Shell is operating in the country for the first time since its share in Basra Petroleum Co. was seized by the government in 1973.

“We’ve worked in Iraq, we know a lot, we kept our data,” van der Veer said. “We are quite excited” about the prospects for renewed collaboration.

To contact the reporter on this story: Eduard Gismatullin in London at

Last Updated: November 24, 2008 10:10 EST

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