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Bloombergan. 31 (Bloomberg) -- Royal Dutch Shell Plc may spend $2.5 billion on a natural gas plant in southern Iraq to meet energy demand in the Middle East, where economies are growing 5.9 percent a year, according to a person involved in the plan.
Shell met with Iraqi officials last week to propose building a pipeline that would link the Basrah region to a new terminal on the country's coast, the person said. Shell would also build a facility that could freeze 16 million cubic meters of gas a day and ship it to Kuwait and the United Arab Emirates, the person said.
Gas demand in the Persian Gulf grew 28 percent from 2003 to 2006 as the United Arab Emirates and Saudi Arabia developed steel, aluminum and chemical industries to curb their reliance on crude oil exports. Shell, based in The Hague, needs new energy sources after oil and gas output fell 14 percent in the four years to 2006.
``The Gulf Arab states need extra sources of gas one way or another,'' said David Butter, a London-based senior Middle East analyst at the Economist Intelligence unit. ``And you'd expect Shell to be looking very closely at Iraq as it has unique potential.''
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