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Shell to Withdraw from Iraq's Majnoon Oilfield

Source: Reuters 9/12/2017, Location: Middle East

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Royal Dutch Shell is seeking to sell Iraq’s Majnoon oilfield and the oil ministry has started preparations to finalize its exit, according to an oil ministry letter and oil officials. A letter signed by Iraqi oil minister Jabar al-Luaibi and dated Aug. 23 and directed to Shell Iraq Petroleum Development gave approval for Shell to quit Majnoon, an oilfield near Basrah which started production in 2014.

“We respect your desire and decision to seek an acceptable end of Shell Iraq Petroleum Development SIPD’s interest in Majnoon,” the oil ministry letter said, a copy of which was seen by Reuters. SIPD is Shell’s local unit.

Three Iraqi oil officials and an Iraqi senior engineer working with Shell in Majnoon confirmed the letter’s authenticity. A Shell spokesman was not immediately available for comment.

In November, industry sources had told Reuters that Shell was considering selling out of its oil fields in Iraq as part of its global $30 billion asset disposal program.

Shell is the operator of the giant Majnoon field near Basrah in southern Iraq which started production in 2014. The officials said the oil ministry and Royal Dutch Shell had been discussing investment budgets and production activities but failed to reach a deal.

“We failed to reach an agreement with Shell over its Majnoon operations, including production plans and investments budgets. We think it’s for the interest of all parties that Shell should withdraw,” said an oil official who attended a meeting last month in the oil ministry to discuss how to manage Majnoon after the withdrawal of Shell.

Shell holds a 45 percent interest in Majnoon that it operates under a technical service contract that expires in 2030, according to its 2015 annual report.

Malaysia’s national oil company Petronas holds a 30 percent stake in the field while the Iraqi government holds the remaining 25 percent. Production from Majnoon is currently at around 235,000 barrels per day, according to Iraq’s oil officials.

Despite the withdrawal from Majnoon Shell will keep its operations in gas and petrochemical projects in Iraq, the letter said.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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