Dow Jones reports that Iraq has agreed with oil majors to build a multi-billion-dollar oil field water injection plant in the south of the country, after disagreement over costs that suspended the project for months.

The water injection project aims to provide water to maintain reservoir pressure to fields such as Rumaila, West Qurna Phase 1 and 2, and Zubair and Majnoon in southern Iraq.

ExxonMobil was picked on behalf of foreign oil firms to lead the mega water-injection project, needed to boost crude oil production rates from Iraq’s southern oil fields.

Other international oil companies (IOCs) that have expressed willingness to set up the common water injection project include UK’s BP, Russia’s OAO Lukoil Holding, Italy’s ENI and UK-Dutch oil major Shell, which is expected to join in later.

“The two (Iraq and oil firms) have advanced toward reaching agreement and we have passed the heads of agreement (phase) into the FEED (Front End Engineering and Design) phase,” Thamer Ghadhban, the top energy advisor to the Iraqi Prime Minister said on the sideline of the Iraq Mega Projects conference in Istanbul.

Foreign companies had suggested the cost would be a little more than $3 billion to build the first stage of the project, which is designed to process 4 million barrels of water a day, Iraqi oil officials had said.

The Oil Ministry’s figures were much lower than those estimated by the oil companies, Ghadhban said.

To overcome differences over costs, Iraq has suggested starting a FEED study aimed at establishing an accurate costs for the project, Ghadhban said.

“It has been decided that they (Iraq and foreign companies) will work together to build the project,” he said.

Last month, Nihad Mous, head of the ministry’s State Company for Oil Projects, said the main issue delaying the project was that BP wanted costs of the water injection project to be reimbursed when production in these fields reached a 10% increase over their base line before the development process. The ministry wants to start paying back when 20% increase in output was reached.

“Of course an oil company wants to be paid early and of course the oil ministry thinks otherwise. I do not at all see these as stumbling blocks,” Ghadhban said.

(Source: Dow Jones)

In its interim results for the first half of 2011, oil services company Petrofac gave the following update on its operations at Shell’s Majnoon oilfield:

“In March 2011, we announced the award of our first contract in Iraq, a US$240 million engineering, procurement and construction management project with Shell. The Majnoon field in southern Iraq is one of Iraq’s largest developments and we are delighted to be working with Shell to assist them with unlocking the field’s potential.

“We are providing engineering, procurement, fabrication and construction management services for the development of a new early production system comprising two trains each with capacity for 50,000 barrels of oil per day, along with upgrading of existing brownfield facilities.

“Work on the project began in mid-2010 and is expected to complete during the fourth quarter of 2012.”

(Source: Petrofac)

Shell has reportedly begun a planned three-day production shutdown at Iraq’s Majnoon oilfield for upgrades and maintenance.

The field, which is currently producing around 65,000 barrels per day (bpd), is expected to restart output on Wednesday, a company spokesman said.

Majnoon is one of the fields awarded to international companies as part of the OPEC country’s plans to raise its output to 12 million bpd from 2.7 million bpd.

According to Reuteres, most analysts see 6-7 million bpd as a more realistic target.

(S0urce: Reuters)

Iraq and partners Shell and Petronas awarded a contract worth more than $60 million [72 billion Iraqi dinars] to Turkish firm Enka to install and operate two production facilities at the Majnoon oilfield, according to a report from Reuters.

The construction and energy company will also install two crude storage tanks and four pumping units which will connect a pipeline network at three well-pads, an Iraqi oil official told the agency on Friday.

“Under the deal, Turkey’s Enka will install two production facilities with a capacity for processing 100,000 barrels per day of crude to be produced from the supergiant Majnoon oilfield … Output is expected to hit 175,000 bpd in 2012 and that requires installing new crude facilities and further preparing well-pads to drill new oil wells.”

The official said Iraq, Shell and Petronas still had to set a date to sign the contract with Enka.

Four companies initially tendered for the deal, including Italy’s Saipem and India’s Punj Lloyd Ltd .

(Source: Reuters)

In July, Shell will start installing 15 production wells and pipelines in the Majnoon oilfield in southern Iraq, Vice president and country chairman Hans Nijkamp told the website of Energy Exchange.

It will also upgrade two degassing stations and build “a new central processing facility to include two new 50,000 bbl/d capacity early production systems”.

Shell has concluded a geographical survey that produced “positive results” about the southern Shatt al-Arab waterway’s ability to handle equipment needed to develop the Majnoon oilfield. “We are now able to use it as a route to transport equipment to Majnoon and minimize road transport .. We are also in the process of constructing a jetty.”

Together with Petronas of Malaysia, Shell won a 20-year service contract in 2009 to raise output from Majnoon to 1.8 million barrels a day. Shell Chief Executive Officer Peter Voser said in October that production at Majnoon had risen to 70,000 barrels a day. The oil field, which straddles the Basra and Maysan provinces, has estimated crude reserves of 12 billion barrels and 9.5 trillion cubic feet of gas.

As we reported over the weekend, Dubai-based Dodsal has won a $106m contract for a pipeline at Majnoon.

(Source: Bloomberg)

Shell and Petronas have awarded Dubai-based Dodsal Group a $106m contract to lay a pipeline at the Majnoon oilfield, an Iraqi oil official said.

Reuters reports that under the deal, Dodsal Group will build a 79-km (50-mile) pipeline to carry oil from the supergiant Majnoon oilfield to a crude storage depot near Zubair in southern Iraq.

The existing 28-inch Majnoon pipeline is outdated and reportedly cannot cope with the projected increase.

“Majnoon’s current output is around 63,000 barrels per day, and it’s expected to hit 175,000 bpd in 2012, which requires building a new pipeline to handle the output increase,” the un-named official said.

(Source: Reuters)

Iraqi state oil workers have tried to stop foreign workers entering the country’s biggest oil field amid a country-wide dispute about pay, according to Iraq Oil Report.

State workers have been protesting for some time about receiving lower pay than their colleagues at fields run by the international oil companies.

In addition to the action at BP‘s Rumaila oilfield, an internal union memo said workers would also try to block foreign workers at ENI‘s Zubair field, and Shell‘s Majnoon, as part of a “boycott day”. The workers are risking arrest, since unions and striking are illegal in the country.

A BP spokesman said any industrial action had no impact on operations. According to Iraq Oil Report, the action at Rumaila was averted following an appeal from Basra’s governor.

(Sources: Iraq Oil Report, The Telegraph)

Petronor FZE, an oilfield services company operating in Iraq, announced today that, following South Oil Company (SOC) approval, has signed a contract with Shell to provide offices and accommodations in its Iraq Energy City near Basra. A next-generation oilfield supply base, Iraq Energy City provides working and living space to a wide-array of oilfield service and independent contracting companies and is an ideal base for operations in Southern Iraq. Located near South Oil Company’s (SOC) Bergessia base and the Basra airport on land leased by Petronor FZE from the Ministry of Oil (MoO) through a contract with SOC, Iraq Energy City has a future capacity of 5,000 residents and is already home to several international companies.

“We see the demand and excitement growing for Iraq Energy City,” said Peter Day, Petronor CEO. “Majnoon is one of the largest fields in the World, and companies like Shell realize the importance to entry into Iraq and the proximity of independent contracting companies living and working in the same oilfield base. We feel that our growing list of tenants will create a dynamic environment that will enable successful entry and operations in Iraq.”

Southern Iraq is experiencing a renewed oil rush since the Iraqi government awarded contracts worth more than $200 billion to international oil companies (IOCs) to develop fields near Basra. Iraq Energy City is ideally located to support Shell’s own development of the super-giant Majnoon oilfield.

“We are very pleased to welcome Shell to Iraq Energy City,” said Mr. Hans Hoiskar, General Manager of Petronor Iraq. “Our objective is to lower the barriers of entry into Iraq by creating an ideal living and working environment where security and operating costs can be shared and overall risks mitigated. “

A wide-range of companies have already committed to Iraq Energy City, creating a competitive local market for oilfield and related services. Being developed in a logical sequence, Iraq Energy will grow from camp accommodations to permanent structures for offices, warehouses, workshops and yards. In later development phases, the addition of apartment buildings, hotels, recreational facilities, retail outlets, and schools will enhance the living experience for workers and their families.

“The ability to interact with many different oilfield service companies and the short-time frame to taking up residence is very appealing to Shell,” said Mr. Hoiskar. “Furthermore, Iraq Energy City is in a prime location for easy-access to the Majnoon field, Basrah City, as well as the other southern Iraqi fields.”

About Petronor

Petronor, FZE, is a privately owned company with headquarters in Dubai, UAE. The company was founded in 2001 and provides services to the oil and gas industry in Iraq from its offices in Baghdad and operating bases at Baghdad International Airport and Iraq Energy City, Basra. In addition to Iraq Energy City, Petronor also offers oilfield services such as Environmental Studies and Water Services in partnership with Aquateam AS of Norway, and their Safe Fields™ technology where Mobile Collaboration Centers offer secure, remote access to oil fields in Iraq.