The Anglo-Dutch super major was near to firming up the contract last week after tying up pending legal issues with the Iraqi government.
A joint venture called Basra Gas Company has been set up with the Iraqi government holding a 51% stake.
The deal still needs the approval of the Iraqi government.
Shell looks to capture over 700 million cubic feet of gas flared from 3 oilfield in the south of the country namely Rumaila, Zubair and West Qurna Phase 1.
The three fields are producing 1.05 billion cfpd day, but only 450 million cfpd are utilised while the rest is flared.
This project is important to Iraq as it aims to expand its oil production since, as oil output rises, the associated gas produced along with the oil will need to be handled.