Shell and Dow in talks on Iraq chemical plant
Wed Aug 29, 2007 6:16PM EDT
DUBAI (Reuters) - Royal Dutch Shell and Dow Chemical are in talks with the Iraqi government to renovate and expand a chemical plant in southern Iraq at a cost of up to $2.1 billion (1 billion pounds), the Iraqi industry minister said.
The talks on creating a joint venture or reaching a profit-sharing agreement could be concluded this year, Fawzi Hariri told Reuters in Dubai on Wednesday on the sidelines of an Iraq reconstruction conference.
"We are looking to upgrade this, and evaluate what type of products and facilities we need for the local market and beyond," Hariri said of the plant near the city of Basra.
Alexandra Wright, a spokeswoman for Shell in London, declined to confirm the discussions but said: "We are in talks with the Iraqi government and third party organisations on a range of issues. The nature of those discussions is a matter of commercial confidentiality."
Shell, like the other western oil majors, is eager to gain access to Iraq's oil reserves -- the third-largest in the world -- although security concerns mean the companies are reluctant to put people on the ground.
Traditional hostility to foreign investment in their oil industries on the part of Gulf Arab states could also prove to be a barrier to Shell or others gaining access to upstream reserves in Iraq.
However, investment in lower-return downstream projects such as refineries, gas terminals or petrochemical facilities can sometimes be a stepping stone for foreign firms in such situations.
A spokesman for Dow declined to comment.
U.S. State Department spokesman Tom Casey said the U.S. welcomed foreign investment in Iraq. "Part of the puzzle that needs to be solved and dealt with as Iraq continues to develop its political system, is to provide economic opportunity for the people there and to provide jobs," he said.
Iraq, which produces most of its crude in the south of the country, pumped 2.07 million barrels per day last month, making it the Middle East's fifth-largest producer, according to a Reuters survey this month.
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