| 2008: Shell Opens an Office in Baghdad After a 36 Year Absence |
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September 22, 2008 Royal Dutch Shell, one of the world’s biggest oil companies, completed a multibillion-dollar natural gas deal with the Iraqi government on Monday and said it had established an office in Baghdad — the first foreign petroleum giant to do so since Iraq nationalized its oil industry more than three decades ago. The company described its decision to open an office here as a milestone that partly reflected the vast improvement in Iraq’s stability compared with conditions during the worst years of the war. But in a sobering reminder of the underlying dangers of doing business here, the company would not disclose the location of its office, and the senior Shell official who announced the gas deal was accompanied by a phalanx of armed guards. “We are ready to establish a presence,” the official, Linda Cook, executive director of the company’s gas and power unit, said during a news conference in Baghdad’s heavily guarded Green Zone. Ms. Cook, who oversaw the signing of the gas deal with the Iraqi government, appeared with Iraq’s oil minister, Hussain al-Shahristani. The joint venture — to recapture gas that now goes to waste during oil extraction in Basra, in southern Iraq — is the company’s official return to Iraq after 36 years. Shell, along with the predecessors to BP, Exxon Mobil and Total, was among the original partners in the Iraq Petroleum Company before the companies lost their concessions to nationalization as Saddam Hussein rose in the 1970s. Much of the recaptured gas will go to power stations and industrial sites like petrochemical and fertilizer plants, Mr. Shahristani said. The signing of the deal was expected; Shell is one of more than 30 foreign companies bidding on long-term contracts for six important oil fields. The winners are to be announced in 2009. A condition for any winning bid set by the Iraqi government is that the company be willing to establish a presence in Baghdad. Shell was also among a smaller group of Western companies negotiating no-bid contracts to help Iraq increase production from existing oil fields, but the process was suspended earlier this month following criticism from several United States senators. Mr. Shahristani praised the gas joint venture, which will be 51 percent owned by the Iraqi government through the South Oil Company and 49 percent by Shell, as a step to address Iraq’s chronic and crippling power shortages. Besides their economic implications, the power problems have become a highly charged political and emotional issue for Iraqis. The deal with Shell came on the heels of a $3 billion agreement with China |