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Oil Markets Will Only Get Tighter

Oil Markets Will Only Get Tighter

OPEC has agreed to increase…

Shell Looks To Exit Iraq’s Majnoon Oil Field

Shell

Shell has decided to sell its interest in Iraq’s Majnoon oil field after the oil major and Iraq failed to agree on future production plans and investments budgets, Reuters reported on Wednesday, citing a letter of Iraq’s oil ministry to Shell that it had seen.

“We respect your desire and decision to seek an acceptable end of Shell Iraq Petroleum Development SIPD’s interest in Majnoon,” reads the oil ministry’s letter that is dated August 23 and signed by Oil Minister Jabbar Al-Luiebi.  

Three local oil officials and a senior engineer working at Majnoon with Shell confirmed to Reuters that the letter was authentic.

As early as in November last year, Shell was said to be considering its exit from Iraqi oil fields, including divesting its 45 percent stake in the Majnoon field, as part of a wider divestment strategy. Back then, Shell was mulling the sale of its oil field interests only, and was set to keep its natural gas fields in Iraq.

At the Majnoon oil field, near Basra in southern Iraq, Shell is the operator and holder of 45 percent, with Malaysia’s Petronas owning 30 percent, and Iraq’s Missan Oil Company holding the remaining 25 percent.

The oil field started production in 2014 and now produces an average of 210,000 bpd, according to Shell’s website. According to Iraqi oil officials who spoke to Reuters, the current production is around 235,000 bpd.

Related: Is Russia Pushing Saudi Arabia Out Of Asia?

An oil official who had attended a meeting in August at the oil ministry about the future of the Majnoon field after Shell’s withdrawal told Reuters:

“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.”

According to the oil ministry’s letter, Shell plans to keep its interests in natural gas and petrochemical projects in Iraq.

By Tsvetana Paraskova for Oilprice.com

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