Royal Dutch Shell is to become the first western oil company to sign a deal with the Iraqi government since the US-led invasion of 2003, agreeing a plan to capture and use gas in the Basra region that could be worth up to $4bn.

It also emerged on Monday that Iraq’s oil ministry had written to oil companies saying it had abandoned its controversial plan to award short-term technical support contracts to a small number of them to work on its oil fields.