Iraq and Shell are to create a joint venture

According to this agreement Iraq will hold 51 percent in the venture and Shell 49 percent. Oil Minister Hussain Al-Shahristani gave very obscure details of the deal.

The only thnig clear is that it is expected to include the capture of natural gas released as a by-product of crude oil extraction.

Shell is also expected to produce dry gas as well - gas which is not a by-product of oil.

This will allow to make liquefied natural gas (LNG), thus Iraq may become one of the world's key LNG exporting countries.

Shell's proposals include plans to supply the local market and export through Iraq's southern ports or through a pipeline.

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.

Iraq recently agreed a $3 billion oil service contract with China, the country's first major oil deal with a foreign firm since the fall of Saddam Hussein more than five years ago.

Iraq needs huge amounts of investment to boost oil output and rebuild itself after years of sanctions and war.

That's why Shahristani will meet energy firms bidding for those oil and gas service contracts in London next month to discuss details of the fields on offer as well as contract terms, the Oil Ministry has said.

Author: Ksenia Kochneva