A contract between Royal Dutch Shell, Europe's largest oil company, and the Iraqi government may face oil majors operating in the southern part of the oil-rich Middle East country to give a large portion of the gas they extract to the Anglo-Dutch oil giant.
Shell (RDS-A) has a $17 billion with Iraq that is awaiting final approval. Under the terms of that accord, the Iraqi government has said it will supply Shell with all the raw gas and liquefied natural gas it needs, according to Reuters. That gas would come from the Zubair, Rumaila and West Qurna 1 fields.
Companies operating there are required by Iraq to turnover excess gas not used for power generation or reinjection to Iraq's state-run South Gas Co., Reuters reported. The affected companies will be allowed to issue proposals outlining alternatives for the excess gas.
Among the oil majors operating in the Zubair, Rumaila and West Qurna 1 fields are Exxon Mobil (XOM) and PetroChina (PTR), the two largest oil companies in the world by market value. BP (BP), Europe's second-largest oil company, and Eni SpA (E), Italy's largest oil company, would also be impacted by the Shell agreement.
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