Iraq's Oil Ministry has confirmed that it is in talks with Royal Shell Dutch over the possibility of jointly developing new natural gas resources in the south of the country.

According to Munadhil Abid Khanjar, the head of the Basra Economic Development Committee, Iraq is currently losing around £20 million worth of natural gas a day purely as a result of a lack of adequate infrastructure to facilitate its consumption or export.

As such, plans are being pursued which will see the international energy giant invest between £1.5 billion and £2 billion in the oil fields around Basra over the next five years, with the state-run South Gas Co to hold a 51 per cent share and Shell holding the remainder.

The news comes just days after the Oil Ministry announced that it was negotiating with Shell over the possibility of conducting output tests at the Akkas gas field in the west of Iraq.

It is estimated that this largely untapped field holds reserves in excess of 2.15 trillion cubic feet, with the potential to produce 500 million cubic feet a day to export to European consumers via a pipeline through Syria and Turkey.