Shell to start Iraq oil output amid plans for Saudi investments
BY MAHER CHMAYTELLI & NAYLA RAZZOUK
DUBAI -- Shell will start producing crude at Iraq’s Majnoon oil field as early as next month, and plans to increase energy investments in Saudi Arabia, its regional vice president said.
Output from Majnoon, one of Iraq’s largest oil fields, will start “around mid-year” and increase to 175,000 bopd by the end of 2013, Mounir Bouaziz said in an e-mailed response to questions. In Saudi Arabia, Shell is holding talks with officials on a project to develop natural gas from the kingdom’s Kidan field in the Rub al-Khali, or Empty Quarter, he said.
“Our discussions with our joint venture partner cannot contractually be disclosed, but I can reiterate that Shell is committed to the kingdom and we are keen to grow our investments both upstream and downstream,” he said.
Saudi Arabia is the world’s biggest oil exporter. Iraq, which holds the world’s fifth-largest crude reserves, overtook Iran last year to become the top producer, after Saudi Arabia, in OPEC.
Shell has faced “teething problems” at Majnoon, mainly due to the unexpected quantities of unexploded munitions at the field, customs-related delays of imported equipment and slow processing of entry visas, Bouaziz said. “However, what is encouraging is that we do see real improvements in these administrative processes.”
Shell is lead operator of Majnoon, with a 45% share, while Malaysia’s Petronas has a 30% stake and Iraq’s government holds the remainder. The field, straddling the southern provinces of Basra and Maysan, contains estimated reserves of 12 billion bbl of crude and 9.5 Tcf of gas.
Shell is in “exploratory discussions” with the Iraqi government about the target for oil output at Majnoon, Bouaziz said. Iraq agreed in January with Lukoil to cut targeted production at the West Qurna-2 field, where Lukoil is the operator. The government is also in talks with ExxonMobil and Eni to reduce targeted output at West Qurna-1 and Zubair, respectively.
Whether the discussions result in a reduced plateau, “it is important that the government keeps up with its efforts to provide an enabling environment for the oil and gas investments,” Bouaziz said.