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Iraq May Delay Shell Gas Deal Until Next Yr? Official


VIENNA (Dow Jones)-A multibillion dollar deal between Royal Dutch Shell PLC (RDSA) and the Iraqi government to jointly develop domestic gas infrastructure in Iraq’s south could be delayed until after the country’s elections in January, a senior Iraqi oil official said Tuesday.

“We haven’t yet finished work to finalize the deal,” the official, who is involved in negotiations with Shell, told Dow Jones Newswires by telephone from Baghdad.

“Teams from both sides could need until December to finish their work.”

The official said that the outcome of the talks must be submitted to the Iraqi government for approval before the $3 billion-$4 billion contract can be signed, and that would also take a few weeks.

A year ago in Baghdad, Shell and Iraq’s South Gas Co. reached a preliminary agreement to produce gas from key Iraqi oil fields in the southern province of Basra. At the time, they agreed to finalize the deal in a year.

Shell said it was still optimistic that the deal would be signed on time. “We are working with our Iraq partners to reach final agreements at the earliest time,” Shell spokesman Christos Mylonas told Dow Jones Newswires in an email.

However, the Iraqi official said that although the heads of agreement signed with Shell in September last year states the deal should be finalized in a year, it also states that the deadline can be extended for six months.

Iraqi Prime Minister Nouri al-Maliki and his oil minister, Hussein al-Shahristani, are both backing the deal, but it faces a great deal of political opposition from other lawmakers. Analysts say the government might choose to delay finalizing the deal until after the January elections because signing the contract could harm Maliki’s chances of winning.

-By Hassan Hafidh, Dow Jones Newswires; + 962 799 831 831; [email protected]

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