Iraq to sign final Shell gas deal Sunday

BASRA, Iraq Fri Nov 25, 2011 1:12pm GMT

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BASRA, Iraq Nov 25 (Reuters) - Iraq on Sunday will sign the final $17-billion deal with Royal Dutch Shell and Mitsubishi to capture flared gas despite a legal challenge from local officials, head of state-run South Gas Company said on Friday.

The 25-year venture is expected to help Iraq make use of more than 700 million cubic feet per day of gas that is now being burned and help generate much-needed electric power.

"There were some legal issues but these have been resolved," Director General Ali Khudhier told Reuters on the sidelines of an oil and gas conference in Basra.

"It is the final contract, there were no changes," he said.

The contract had been scheduled to be signed on Nov. 24 and will go ahead on Sunday even though some members of the Basra Provincial Council say they plan to present a lawsuit because the council was not included in talks on the agreement.

"We are getting ready to present a legal case against the oil ministry," said provincial council member Farid Khalid.

Khudhier said the council members were not opposing the Shell deal itself, but wanted to have a larger participation in decisions on the agreement.

The Shell deal is one of the largest agreements signed with a foreign energy company by Iraq as the OPEC member works to rebuild its oil industry after years of sanctions and war following the 2003 invasion that ousted Saddam Hussein. (Reporting by Rania El Gamal and Aref Mohammed; Writing by Patrick Markey)

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