November 12, 2012 / 12:50 PM / 5 years ago

UPDATE 1-Shell sees Iraq Majnoon 2013 output at over 200,000 bpd

By Ahmed Rasheed

BAGHDAD, Nov 12 (Reuters) - Iraq's Majnoon oilfield, operated by Royal Dutch Shell, is expected to hit output above 200,000 barrels per day (bpd) in the third quarter of 2013 - above the level needed to start recovering costs, Shell's 2013 programme for Majnoon said.

The company's outlook is positive news for Iraq's government whose oil policy has been damaged by news that Exxon Mobil Corp. will pull out of a major oilfield project and shift its attention to the country's autonomous Kurdistan region.

Majnoon, one of the OPEC member's major fields, started a shutdown in June for maintenance and to bring new production facilities online.

Under the Majnoon development plan for 2013, Shell has submitted a budget of $1.384 billion as a "total recoverable cost" for field development, a copy of the programme obtained by Reuters showed.

Operations at the field are expected to resume in the first quarter of 2013 with output of 44,600 bpd and 50,200 bpd in second quarter. Shell is targeting 201,700 bpd output there in the third quarter and 202,700 bpd in the fourth.

Shell and minority partner Petronas of Malaysia, won the Majnoon service contract by promising to boost the largely undeveloped field to 1.8 million bpd for a fee of $1.39 a barrel, though it started talks with Baghdad this year to reduce the target at the super-giant field to 1 million barrels per day.

Under the contract the consortium should reach a 170,000 bpd output - its so called First Commercial Production level - to trigger it to retrieve investment costs.

"The scope of work for First Commercial Production involves following key elements: production optimisation from the existing well stock, drilling of 18 new wells and de-bottlenecking and upgrading of existing facilities," the Majnoon development programme showed.

Production at the field was around 45,000 bpd when Shell took over in 2010. Shell has since spent around $1 billion, and planned to invest another $1 billion in 2012.

The programme said that at the end of this year 14 wells would have been completed and this process would replace existing wills contaminated with water.

"By the end of 2012, 14 wells are expected to have been completed, including 3 wells to be drilled by a Schlumberger rig, thereby offsetting wet production wells in the existing well stock," the development program showed.

The 12.6 billion barrel Majnoon field is one of the main fields alongside Rumaila, West Qurna Phase One and Zubair, that Iraq is developing with foreign companies in the south of the country as it recovers from years of war and sanctions.

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