Shell’s Majnoon Deal Highlights Iraqs Oil Target

Shell is in negotiations with the Oil Ministry over the final development of Iraq’s Majnoon field, a lower more realistic production target is seen as an integral part of the discussions.

The Majnoon oilfield is one of four giant fields which are seen as integral to Iraqs ambition to more than double its oil output and put it firmly among the world’s top producers.

In 2009 Iraq awarded service contracts to foreign firms who agreed to boost the capacity to greater than 12 million barrels per day (bpd) by 2017. However many independent analysts see this target as too aggressive due to inadequate infrastructure and logistical shortcomings.

Iraqi officials acknowledge that output targets need to be more prudent and have suggested a level of between 8.5 – 9 million bpd. Shell, with junior partner Petronas of Malaysia, won the Majnoon contract promising to boost the largely underdeveloped field to 1.8 million bpd for a fee of $1.39 a barrel. Production capacity is now 65,000 bpd.

Shell was the first firm to open negotiations with the oil ministry, it has proposed to extend the field’s plateau period – the time a period for which peak production can be sustained – which is to begin in 2017.


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