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Iraq-Shell Gas Deal Likely To Be Delayed

The delay is another sign that Iraq's political wrangling is threatening its hopes for investment in natural resources to fill the national coffers with the badly needed cash. It could also contribute to the perception that Iraq is an unstable partner for international oil companies looking to invest.

Samuel Ciszuk, Mideast energy analyst for London-based IHS Global Insight, said any progress on the Shell deal is unlikely "unless the parties favoring the deal strengthen their positions in the forthcoming election."

Encouraged by security improvements since the second half of 2007, Iraq has since set ambitious plans to develop its energy industry.

But the fight for power between the country's political factions has become an obstacle and so has the opposition from nationalist Iraqis who fear bringing in international oil companies could cede control over national oil wealth.

Similar objections forced the Oil Ministry to scrap plans to develop five oil fields in June 2008. Iraq's first postwar oil bidding round to develop eight oil and gas fields also had its share of critics, most of whom objected to awarding contracts to Western developers.

The June 30 bidding process resulted in just one contract being awarded out of eight due to tough financial terms.

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