Shell to start mass production at Iraq oilfield
Baghdad, September 9, 2013
Iraq's giant Majnoon oilfield, run by Royal Dutch Shell, will start up production next month at a rate of 175,000 barrels per day (bpd), an oil ministry spokesman said on Monday.
Majnoon is one of four giant southern fields vital to Iraq's ambition to at least double output that is now around 3 million bpd.
Opec's second biggest producer expects its output to rise by 400,000 bpd by the end of this year, with Majnoon providing a big part of that.
Baghdad sent a letter of complaint to Shell last month for missing start-up dates at this 12 billion barrel oilfield, which was pumping about 45,000 bpd when the company took over in 2010. Shell later suspended operations to carry out maintenance work.
The Iraqi government said the delays had resulted in a production lag, costing the country $4.6 billion.
"Now, we have started testing the oilfield installations in preparation for opening the wells and pumping to a capacity of more than 175,000 bpd, which will start next month," spokesman Asim Jihad told Reuters.
"This is the preliminary production until we reach the higher production target in future, which is more than one million bpd."
Iraq signed a series of service contracts with major oil companies such as Shell, BP, ExxonMobil and Total at the end of 2009 to develop its oilfields, neglected for decades due to wars and sanctions.
The revival of the neighbouring Rumaila, Zubair and West Qurna-1 oilfields has already added 600,000 bpd.
Garraf oilfield in the south, developed by Malaysia's Petronas and Japan Petroleum Exploration Co. Ltd started production of 35,000 barrels per day on Saturday.
Petronas also has a minority interest in Majnoon.
The projected increase in production does not include output from fields in the north, where the Kurdistan Regional Government (KRG) has signed contracts on its own terms with the likes of Exxon Mobil and Chevron Corp, angering Baghdad.
Shell has built up a strong position in southern Iraq as operator of Majnoon, junior partner with Exxon at West Qurna-1 and a partner in a natural gas project.-Reuters