By John Lee.
A Shell spokesman told UAE-based newspaper The National:
“Following extensive discussions with the Ministry of Oil, the oil minister of Iraq formally endorsed a recent Shell proposal to pursue an amicable and mutually acceptable release of the Shell interest in Majnoon, with the timeline to be agreed in due course.”
Reuters quotes an oil official as confirming that the Ministry failed to reach an agreement with Shell over its Majnoon operations, including production plans and investments budgets. "We think it’s for the interest of all parties that Shell should withdraw,” he added.
A Shell spokesman told Reuters:
“In May 2017, the ministry of oil in Iraq applied the performance penalty and remuneration factor on the Shell operated venture, the Majnoon oil field, which had a significant impact on its commerciality.”
The company holds a 45-percent share in the project, with Malaysia's Petronas holding 30 percent, and the Iraqi state-owned Maysan Oil Company having 25 percent.
Output from the field, which commenced production in 2014, is currently estimated at around 235,000 barrels per day (bpd), with a 400,000 bpd target by 2020.
In addition to its oil interests in Iraq, Shell is a key player in the Basra Gas Company (BGC), a joint venture between the Iraq’s South Gas Company (SGC) (51%), Shell (44%) and Japan's Mitsubishi (5%), which processes gas from the Rumaila, West Qurna and Zubair fields, which would otherwise be flared.
The National also quotes a Shell spokesman as saying that the company remains committed to this, and to its petrochemical project in Iraq:
“By leaving Majnoon, Shell will be in a stronger position to focus its efforts on the development and growth of the Basrah Gas Company and the Nebras Petrochemicals Project.”
(Sources: Reuters, The National)