A six-month extension of negotiations proposed by the Iraqi government to develop domestic gas infrastructure in the country's south may not be enough to settle a deal with Royal Dutch Shell PLC because of financial constraints and opposition from politicians.

Iraq, facing a budget deficit of around $19 billion this year, needs to contribute between $5 billion and $7 billion to the project.

The proposed $10 billion to $20 billion joint venture between Iraq's South Gas Company, Shell and Mitsubishi Corp. would initially deliver gas to Iraq's domestic market, mainly for electricity generation. Later, some would be sold outside the country, possibly in the form of liquefied natural gas, as Iraq seeks to become a major LNG exporter. LNG is gas that is cooled and shipped on tankers.

The two sides failed to finalize the deal last month, after negotiations lasting more than a year, and have agreed to extend the talks for another six months ending Sept. 21.

Full Story...

Posted by mopeng at April 12, 2010 3:03 PM