BAGHDAD - The head of Iraq's parliamentary Oil and Gas Committee said on Saturday he was concerned about a lack of transparency in a flare gas contract which the government has signed with oil major Royal Dutch Shell.
Shell is finalizing details of the multi-billion-dollar plan, a joint venture with Iraq's state-run Southern Gas Company, before a final agreement is signed. An initial deal was signed in September.
Shell says the deal gives the joint venture a monopoly over all of the natural gas collected as a by-product of oil production in Iraq's rich southern oil fields in Basra.
Some Iraqi politicians have expressed alarm that such a deal could be signed without any tendering process.
"There hasn't been much transparency in this agreement," Ali Hussain Balou, head of the Oil and Gas Committee, told Reuters. "Shell signed this agreement with the ministry ... They did not give a chance to another company. We want to know why."
A ministry spokesman said the deal had been done by the book.
"According to Iraqi law, ministries have the right to form companies and joint ventures. The Oil Ministry acted according to this law in forming a venture with shell," Asim Jihad said.
Gas produced as a by-product of oil extraction is currently flared off in Iraq since no facilities exist now to capture it.
"Shell will buy this flaring gas at international prices," Jihad said. "This framework (agreement) allows Iraq to invest in this gas after decades of simply wasting it."
Iraq wants to use most of the gas to generate electricity to ease chronic power shortages, then export surpluses.
"It would be better to have competition," Balou said, adding that parliament should have scrutinized the deal.
Iraq, which has the world's third largest proven oil reserves, has said it wants to focus on development of its southern gas fields and could become a major supplier to Europe.
Shell is finalizing details of the multi-billion-dollar plan, a joint venture with Iraq's state-run Southern Gas Company, before a final agreement is signed. An initial deal was signed in September.
Shell says the deal gives the joint venture a monopoly over all of the natural gas collected as a by-product of oil production in Iraq's rich southern oil fields in Basra.
Some Iraqi politicians have expressed alarm that such a deal could be signed without any tendering process.
"There hasn't been much transparency in this agreement," Ali Hussain Balou, head of the Oil and Gas Committee, told Reuters. "Shell signed this agreement with the ministry ... They did not give a chance to another company. We want to know why."
A ministry spokesman said the deal had been done by the book.
"According to Iraqi law, ministries have the right to form companies and joint ventures. The Oil Ministry acted according to this law in forming a venture with shell," Asim Jihad said.
Gas produced as a by-product of oil extraction is currently flared off in Iraq since no facilities exist now to capture it.
"Shell will buy this flaring gas at international prices," Jihad said. "This framework (agreement) allows Iraq to invest in this gas after decades of simply wasting it."
Iraq wants to use most of the gas to generate electricity to ease chronic power shortages, then export surpluses.
"It would be better to have competition," Balou said, adding that parliament should have scrutinized the deal.
Iraq, which has the world's third largest proven oil reserves, has said it wants to focus on development of its southern gas fields and could become a major supplier to Europe.
