Shell Eyes 175,000 B/D from Iraq Majnoon in 2012

LONDON (Dow Jones Newswires), Dec. 1, 2010

Shell plans to raise oil production from Iraq's supergiant Majnoon oil field to 175,000 barrels a day by the end of 2012, a company executive said Wednesday.

Shell, which partnered Malaysia's state-run Petronas to develop Majnoon, this year has raised production from the field to 65,000 barrels a day from 40,000 barrels a day, the executive told Dow Jones Newswires on the sidelines of an Iraq petroleum conference being held in London.

The Anglo-Dutch major also signed last week in Basra in southern Iraq a deal with Halliburton of the U.S. and the state-run Iraqi Drilling Co. a contract to drill 15 wells at the 12.8-billion-barrel field. "Drilling is expected to start in March next year," the executive said. He gave no figure of the value of the deal.

In August, a senior Iraqi oil official said that Shell/Petronas had also awarded U.K.-based oil and gas services company Petrofac an engineering, procurement and construction contract to build two crude-oil processing plants, each with a 50,000-barrel-a-day capacity. The project has yet to be signed officially, people familiar with the matter said.

Shell and Petronas were awarded a contract a year ago to develop the Majnoon field, which is located in Basra governorate. Shell owns 45% of the venture and Petronas 30%, with Iraq's state-run South Oil Co. holding 25%.

They pledged to raise production to 1.8 million barrels a day from Majnoon by 2017.

Shell is also in the final stages of negotiations with the Baghdad government to sign a gas deal aimed at capturing and selling gas produced from southern oil fields.

Last week, Iraqi Deputy Oil Mminister Ahmad al-Shammaa told reporters in Basra that the $12.5 billion deal could be signed by the end of this year.

Copyright (c) 2010 Dow Jones & Company, Inc.

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