UPDATE: RWE Signs Gas Partnership With Iraq's Kurdistan Region

German utility RWE AG (RWE.XE) said Friday it has signed an agreement with the Kurdistan regional government to develop the northern Iraq region's natural gas infrastructure and source gas from the area to feed the planned Nabucco pipeline.

In an emailed statement the company's gas procurement wholesale unit--RWE Supply & Trading--said the agreement aims at helping the region "to develop and design its domestic and export [gas] transportation infrastructure" to market Kurdistan's gas reserves.

RWE Supply & Trading also said it hopes the partnership will help to negotiate "gas supply agreements to enable gas from the region to be transported to Turkey and Europe via the Nabucco pipeline".

"We hope to very soon reach agreement on supplies of gas from the Kurdistan region of Iraq," said RWE Supply & Trading Chief Executive Stefan Judisch.

The consortium behind the estimated EUR7.9 billion Turkey-Western Europe Nabucco pipeline comprises Austria's OMV AG (OMV.VI), Romania's Transgaz, Bulgaria's Bulgargaz, Hungary's MOL Nyrt. (MOL.BU) and RWE.

Starting in 2014, the planned 3,000-kilometer Nabucco pipeline is set to carry up to 31 billion cubic meters of natural gas a year from Turkey to Western Europe through Romania, Hungary, Bulgaria and Austria.

Earlier this week the Nabucco consortium said it has shelved plans to source gas from Iran due to the further escalation of the dispute between the international community and Iran over the latter's alleged nuclear weapons program.

Instead, Nabucco is focusing on two feeder pipelines from Georgia and Iraq, the consortium said at the time. The feeder lines are needed to bring supply from gas producers to the pipe.

For months, the Nabucco partners have been working on securing supply, most importantly from Azerbaijan and Iraq.

Negotiations for gas contracts from the Shah Deniz II gas field in Azerbaijan are due to start shortly.

-By Jan Hromadko, Dow Jones Newswires; [phone]; [e-mail]