Iraq Sweetens New Oil Project Terms, Blames Shell for Delay

"It is going to be with completely different contract shapes that are going to be very attractive to the oil companies," Iraq's Oil Minister Abdul Kareem Luaibi said earlier this year of the investment terms for Nasiriya.

Iraq's output began to expand in 2010 after it secured service contracts with IOCs such as BP, Shell, Eni and Exxon Mobil.

The revival slowed in 2013 due to infrastructure and security problems, keeping output below 3 million barrels per day (bpd) in July, athough supply is expected to start rising again later the year.

Majnoon Delays

Oil industry sources say part of the reason for the lag in production is the delayed start-up of Majnoon, an oilfield being developed by Shell and minority partner Malaysia's Petronas, which has angered the government.

A letter sent by the government last month, and seen by Reuters, blames Shell for missing start-up dates at the field, which holds 12 billion barrels, costing Iraq $4.6 billion. Delays over pipeline work started a year ago.

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. The three ventures will cost around $100 billion.


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