Shell closes in on $12bn Iraq gas deal

Iraq is set to sign a final contract with Royal Dutch Shell this week for a $12bn project to capture flared gas at its southern oilfields, according to sources close to the deal.

Iraq's oil ministry, Shell and Japanese project partner Mitsubishi have solved differences that had delayed the joint venture with Iraq's South Gas Co since a draft agreement was struck in 2008.

The joint venture, named Basra Gas Co, would be at the forefront of Iraq's plans to modernise its energy facilities and boost oil exports that hover around levels seen before the US-led invasion in 2003.

The Iraqi government, which is currently losing 1 billion cubic feet per day of gas through flaring, mostly in the south, will own 51 per cent of the venture.