Shell restarts Iraq's Majnoon oilfield, targets output boost

Reuters

By Aref Mohammed

BASRA, Iraq, Sept 20 (Reuters) - Royal Dutch Shell has restarted production at Iraq's Majnoon oilfield, one of fourgiant fields core to the country's plans to boost output andavoid a slowdown in exports this year.

The Anglo-Dutch major, in charge of operations at thesouthern Majnoon oilfield, said on Friday it aims to boostoutput to 175,000 barrels per day (bpd) in October.

"We can confirm that we successfully opened the wells andrestarted production in Majnoon," a Shell spokesman said. "Weare targeting production of 175,000 bpd in the next weeks."

Baghdad sent a letter of complaint to Shell last month formissing start-up dates at the 12-billion-barrel oilfield, whichwas pumping about 45,000 bpd when the company took over in 2010.Shell later suspended operations to carry out maintenance.

An official from Iraq's South Oil Company, which overseesthe running of the country's southern oilfields, had a moreambitious target for Majnoon.

"The test restart of the oilfield will continue until theend of September and production of around 190,000 barrels perday is expected to be reached in October," he said.

OPEC's second-biggest producer expects its output to rise by400,000 bpd by the end of this year, with Majnoon - whichstraddles the border with Iran - providing a big part of that.

Shell has built a strong position in southern Iraq asoperator of Majnoon, junior partner with ExxonMobil atWest Qurna-1 and a partner in a natural gas project.

Baghdad's oil revival, which got under way in 2010, hasslowed this year due to infrastructure and security problems,keeping output far below projected targets and sometimes evenbelow last year's levels of 3 million bpd.

Iraq signed a series of service contracts with major oilcompanies such as Shell, BP, Exxon and Total atthe end of 2009 to develop its oilfields, neglected for decadesdue to wars and sanctions.

The development of the neighbouring Rumaila, Zubair and WestQurna-1 oilfields has already added 600,000 bpd.

Garraf oilfield in the south, developed by Malaysia'sPetronas and Japan Petroleum Exploration Co Ltd,started production of 35,000 bpd earlier this month.

Petronas also has a minority interest in Majnoon. Under theterms of the service contract, Shell vowed to raise productionfrom Majnoon to 1.8 million bpd by 2017 for a fee of $1.39 abarrel. It has been negotiating with Baghdad to reduce thetarget to around 1 million bpd.

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