Boston Globe: Shell tapped to draw up Iraq gas blueprint: “In a breakthrough in its strategy to gain a meaningful role in Iraq's oil and gas industry, Royal Dutch/Shell Group has been tapped by the government to help formulate a blueprint for developing the country's moribund natural gas sector.” (ShellNews.net)
By Selina Williams, Associated Press,
Posted 10/16/2004
LONDON (Dow Jones/AP) In a breakthrough in its strategy to gain a meaningful role in Iraq's oil and gas industry, Royal Dutch/Shell Group has been tapped by the government to help formulate a blueprint for developing the country's moribund natural gas sector.
The initiative is a rare prize for Shell, which is in a long line of oil companies anxiously waiting to secure production contracts in a country that houses the world's second-largest oil reserves after Saudi Arabia and big potential for gas.
Those efforts have been stymied for years, first by sanctions and more recently by the rocky aftermath of last year's U.S.-led overthrow of Saddam Hussein.
Now it appears the Anglo-Dutch oil giant might be a step closer than the rest.
''They've just given us the go-ahead and we will be setting up the team by the first quarter of next year,'' said Piet Ruijtenberg, Iraq project manager for Shell Exploration and Production.
''It's impossible to invest there now for a variety of reasons, but we hope to build relationships through this initiative,'' Ruijtenberg said in an interview Friday.
While drawing up a gas plan won't bring Shell any money as it's doing it for free, it gives it unprecedented access to the oil ministry, allows it to build relationships with key players and aids its strategy to eventually develop the country's oil as well as its vastly underdeveloped gas sector.
It also might leverage the company's chances of claiming a lead role in the development of the Ratawi field in a huge oil basin near the southern city of Basra, which Shell has eyed for many years, analysts said.
The oil company has already been working closely with Iraq's oil industry in the past few years training technical staff.
''There's no doubt that Shell's strategy is to position themselves now so that they can jump in when it all quiets down in Iraq,'' said Mike Burdon, senior consultant at British-based Gas Strategies.
For the moment doing business in Iraq is virtually impossible. Until there's an elected government in place, the oil minister doesn't have the mandate to sign production contracts. The security situation also weighs heavily on most companies as well, preventing them from even setting up local offices in the capital.
The Gas Master Plan, as it's called, will look at using more efficiently Iraq's gas in the domestic, and eventually, export market. It should take around a year to formulate, depending on the level of detail, and will be worked on by staff from the Iraqi oil ministry and Shell, Ruijtenberg said.
It fits neatly into the strategy of Iraqi oil minister Thamer al-Ghadhban to start developing two of the country's natural gas fields next year as well as studying opportunities in the western desert near the border with Syria, with an eventual view to exports.
''It is unfortunate that in the past the value of gas was not recognized and during oil exploration and production activities gas was considered to be an inconvenience and was flared off,'' Ghadhban said in a recent interview with Shell's Middle East magazine.
''We believe that Iraq could be one of the region's big gas exporting countries and that Iraq might be able to contribute to the supply of gas to southern Europe in the future,'' Ghadhban said.
During the rule of Saddam Hussein, Iraq focused mostly on producing crude oil. The associated gas produced with the crude was mostly used domestically either processed into bottled gas for cooking or used for power generation or simply flared.
A small amount around 4 billion cubic meters a year was exported to Kuwait until Saddam's 1990 invasion. There were plans to forge export links into Europe through Turkey.
''As an OPEC country, all the efforts of the national oil company went to exploring for oil the gas was mostly discovered by accident,'' said Muhammad-Ali Zainy, senior energy economist at the London-based Centre for Global Energy Studies.
But with a generally favorable environmental reputation, gas has become a key global alternative fuel to crude oil especially in the wake of technological advances that allow the gas to be cooled into liquefied natural gas, or LNG, and shipped around the world.
http://www.boston.com/dailynews/289/economy/Shell_tapped_to_draw_up_Iraq_g:.shtml