Shell to with­draw from Iraq’s Ma­jnoon oil field

Business World - - WORLD BUSINESS -

BAGHDAD — Royal Dutch Shell is seek­ing to sell Iraq’s Ma­jnoon oil field and the oil min­istry has started prepa­ra­tions to fi­nal­ize its exit, ac­cord­ing to an oil min­istry let­ter and oil of­fi­cials.

A let­ter signed by Iraqi oil min­is­ter Jabar al- Luaibi and dated Aug. 23 and di­rected to Shell Iraq Petroleum De­vel­op­ment gave ap­proval for Shell to quit Ma­jnoon, an oil field near Bas­rah which started pro­duc­tion in 2014.

“We re­spect your de­sire and de­ci­sion to seek an ac­cept­able end of Shell Iraq Petroleum De­vel­op­ment SIPD’s in­ter­est in Ma­jnoon,” the oil min­istry let­ter said, a copy of which was seen by Reuters. SIPD is Shell’s lo­cal unit.

Three Iraqi oil of­fi­cials and an Iraqi se­nior en­gi­neer work­ing with Shell in Ma­jnoon con­firmed the let­ter’s au­then­tic­ity.

A Shell spokesman was not im­me­di­ately avail­able for com­ment.

In Novem­ber, in­dus­try sources had told Reuters that Shell was con­sid­er­ing sell­ing out of its oil fields in Iraq as part of its global $ 30- bil­lion as­set dis­posal pro­gram.

Shell is the op­er­a­tor of the gi­ant Ma­jnoon field near Bas­rah in south­ern Iraq which started pro­duc­tion in 2014.

The of­fi­cials said the oil min­istry and Royal Dutch Shell had been dis­cussing in­vest­ment bud­gets and pro­duc­tion ac­tiv­i­ties but failed to reach a deal.

“We 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,” said an oil of­fi­cial who at­tended a meet­ing last month in the oil min­istry to dis­cuss how to man­age Ma­jnoon af­ter the with­drawal of Shell.

Shell holds a 45% in­ter­est in Ma­jnoon that it op­er­ates un­der a tech­ni­cal ser­vice con­tract that ex­pires in 2030, ac­cord­ing to its 2015 an­nual re­port.

Malaysia’s na­tional oil com­pany Petronas holds a 30% stake in the field while the Iraqi govern­ment holds the re­main­ing 25%.

Pro­duc­tion from Ma­jnoon is cur­rently at around 235,000 bar­rels per day, ac­cord­ing to Iraq’s oil of­fi­cials.

De­spite the with­drawal from Ma­jnoon Shell will keep its op­er­a­tions in gas and petro­chem­i­cal projects in Iraq, the let­ter said. —

A GUARD stands out­side An­glo-Dutch oil ma­jor Royal Dutch Shell’s first gas sta­tion in Mex­ico City, Mex­ico, Sept. 5.

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