Representatives of Japan's Nippon Oil Corp will visit Iraq next week to finalise a long-awaited deal to develop Iraq's giant Nassiriya oilfield, Deputy Oil Minister Ahmed al-Shamma said on Tuesday.

Iraqi officials have said they had reached an agreement with Nippon and its partners, oil explorer Inpex Corp and plant engineering firm JGC Corp, on financing a possible deal to develop Nassiriya, which Iraq says has  capacity to produce 100,000 barrels a day within 18 months.

Italy's Eni has also been vying for the contract, but Iraqi officials have signalled it is almost certain to go to the Japanese firms.

Shamma also said the value of initial investment in a joint venture with Royal Dutch Shell and Mitsubishi, to capture flare gas, would be $8-10 billion, based on an initial expected quantity of gas to be processed daily.

The project, in which Iraq's South Gas Company will hold a 51-percent stake and the foreign firms 49 per cent, seeks to capitalise on gas that is released as a by-product of oil extraction and is currently burned off.

'This is the expected investment required, not throughout the proposed contract which is 25 years, (but) only to deal with this specific quantity of gas to be processed,' Shamma said in an interview.

'It at least would cover the first 15 years, but (with) the development of (oil) fields ... of course there will be more gas and that will need to be taken care of,' he told Reuters.

Shell says that currently 700 million standard cubic feet of raw gas is being flared from Iraq's southern oil production every day, a quantity that would allow production of 300,000 cylinders of liquefied petroleum gas per day.

Separately, Shamma said daily gas output from the Mansuriyah and Akkas gas fields, which Iraq plans to develop on its own after global firms failed to snap them up in a June energy auction, would be 100 million cubic feet each in a first phase.

He said seismic studies were currently being conducted and that existing wells, which number around 12 between the two fields, would be renovated before the initial operations would begin under the umbrella of the state North Oil Company.

Estimated reserves at Akkas are 2.1 trillion cubic feet and its production potential is seen at 500 million cubic feet per day. Mansuriyah's reserves are seen at 3.3 trillion cubic feet and potential output is seen at 330 million cubic feet per day.

Iraq, which has the world's third largest oil reserves, also has vast natural gas potential. According to the US government, proven natural gas reserves are 112 trillion cubic feet, while probable reserves are closer to between 275 trillion and 300 trillion cubic feet. – Reuters