By John Lee.
Shell is to start producing crude at the Majnoon oil field (pictured) as early as next month.
Bloomberg quotes the company's regional vice president, Mounir Bouaziz, as saying that output will start “around mid-year” and increase to 175,000 bpd by the end of 2013.
He said that the project had faced “teething problems”, mainly due to the unexpected quantities of unexploded munitions at the field, customs-related delays of imported equipment and slow processing of entry visas, but added, “however, what is encouraging is that we do see real improvements in these administrative processes.”
Shell and its partner Mitsubishi Corp. (8058) started operations on May 1 at a $17 billion joint venture for salvaging gas from fields in southern Iraq. The venture, Basrah Gas Co., is now capturing 400 million cubic feet a day of so-called associated gas, which occurs together with crude, Bouaziz said. Iraq estimates that it’s losing millions of dollars by flaring off some 700 million cubic feet of gas because it lacks facilities to store and sell the fuel.
Basrah Gas will start within 18 months exporting liquefied petroleum gas, which is used for cooking and heating homes, he said. Iraq currently imports 500 metric tons to 1,000 tons of LPG a day, while it flares 4,000 tons daily, Bouaziz said.
The venture may eventually produce liquified natural gas.
“Considering the amount of gas that will be produced in Iraq, it is very likely that the Basrah Gas Co. LNG project will be needed,” he said. A final decision would be up to state-owned South Gas Co., the venture’s majority shareholder, Bouaziz said.