Shell and Dow Plan a Move Into Future Iraqi Oil Market

From Staff Reports

Anglo-Dutch oil company Royal Dutch Shell (NYSE: RDS.A) is reportedly in talks with Dow Chemical Co. (NYSE: DOW) to develop an Iraqi petrochemical plant for $2.1 billion.

The goal of the deal is to give the two firms a beachhead in the Iraqi oil market if that industry ever gets restarted. Some analysts say it will take years and will be very tough to run profitably. Plans call for the facility to be built in the southern Iraqi city of Basra, where it will utilize the city’s existing refinery with its capacity of more than 100,000 barrels a day. But Reuters says the value of the project may be more political and less financial. The real value of the reported project may therefore be political rather than financial. News of the Shell and Dow Chemical venture came from Iraqi Industry Minister Fawzi Hariri, who told Reuters yesterday that the upgrade would help "the local market and beyond."

A Shell spokesperson would only say that the company was talking with the Iraqi government on a variety of possible topics, and would not elaborate. Dow wouldn’t talk, at all, according to reports. Many experts are watching for the expected passage of what is being labeled as Iraq’s.“notorious oil law”It will be the No. 1 topic when the Iraq parliament convenes again in September, and could involve a plan and a strategy on how the country will unlock more than two-thirds of its oil reserves, estimated at 112 billion barrels of crude.