Shell Positive on Iraq Majnoon

Source: Oman Observer 11/13/2012, Location: Middle East

Iraq's Majnoon oilfield, operated by Royal Dutch Shell, is expected to hit output above 200,000 barrels per day (bpd) in the third quarter of 2013 — above the level needed to start recovering costs, Shell's 2013 programme for Majnoon said.

The company's outlook is positive news for Iraq's government whose oil policy has been damaged by news that Exxon Mobil Corp. will pull out of a major oilfield project and shift its attention to the country's autonomous Kurdistan region.

Majnoon, one of the Opec member's major fields, started a shutdown in June for maintenance and to bring new production facilities online.

Under the Majnoon development plan for 2013, Shell has submitted a budget of $1.384 billion as a "total recoverable cost" for field development, a copy of the programme obtained by Reuters showed.

Operations at the field are expected to resume in the first quarter of 2013 with output of 44,600 bpd and 50,200 bpd in second quarter. Shell is targeting 201,700 bpd output there in the third quarter and 202,700 bpd in the fourth.

Shell and minority partner Petronas of Malaysia, won the Majnoon service contract by promising to boost the largely undeveloped field to 1.8 million bpd for a fee of $1.39 a barrel, though it started talks with Baghdad this year to reduce the target at the super-giant field to 1 million barrels per day.

Under the contract the consortium should reach a 170,000 bpd output - its so called First Commercial Production level — to trigger it to retrieve investment costs.

Production at the field was around 45,000 bpd when Shell took over in 2010.


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