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Shell restarts Iraq's Majnoon oilfield, targets output boost

By Aref Mohammed

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

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

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

Baghdad sent a letter of complaint to Shell last month for missing start-up dates at the 12-billion-barrel oilfield, which was 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 oversees the running of the country's southern oilfields, had a more ambitious target for Majnoon.

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

OPEC's second-biggest producer expects its output to rise by 400,000 bpd by the end of this year, with Majnoon - which straddles the border with Iran - providing a big part of that.

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

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

Iraq signed a series of service contracts with major oil companies such as Shell, BP, Exxon and Total at the end of 2009 to develop its oilfields, neglected for decades due to wars and sanctions.

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

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

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