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Shell Sells Stake In Iraqi Oil Field To Japan’s Itochu

Shell

Royal Dutch Shell has sold its 20-percent stake in Iraq’s West Qurna-1 oil field to Japan’s Itochu Corporation, and Iraq has approved the transaction, a senior Iraqi oil official told Reuters in an interview on Wednesday.

“Shell sold its stake in West Qurna 1 to Itochu and the oil ministry approved it. We met with Itochu and discussed the required financial investments and operations at the field,” Ihsan Abdul Jabbar, the head of Iraq’s state-run Basra Oil Company (BOC), told Reuters.

The operator and lead contractor at the West Qurna-1 oil field is ExxonMobil, which had agreed in 2010 to rehabilitate the field together with its co-venturers the Oil Exploration Company of Iraq and Shell’s affiliate, Shell West Qurna BV.

In September last year, Shell said that it was in the process of selling its stake in West Qurna-1.

Shell has also said that it wants out of the Majnoon oil field in Iraq and has agreed to exit the venture and hand over its operation to BOC by the end of June 2018. Currently, Shell is the operator and holder of 45 percent at Majnoon, with Malaysia’s Petronas owning 30 percent, and Iraq’s Missan Oil Company holding the remaining 25 percent.

Chevron, alongside France’s Total and PetroChina, could form a consortium to take over the operation of the Majnoon field from Shell.

At the end of December, Iraq said that it had formed a management team to take over operations from Shell after the Anglo-Dutch major exits the field by the end of June. Iraq wants to raise production at Majnoon from the current 235,000 bpd to around 400,000 bpd in the “coming years”.  

Related: Is An Oil Price Correction Overdue?

BOC’s Abdul Jabbar told Reuters today that the Iraqi company had reached a deal with U.S. engineering and construction firm KBR Inc to help it to manage projects to boost the production capacity at Majnoon.

Iraq is currently in negotiations with another foreign engineering company to operate facilities at Majnoon, Abdul Jabbar told Reuters, adding that a deal with the company he did not name is expected before June 2018.

Shell currently advises the management teams at Majnoon on how to keep operations normal and on the tendering process for operators, the Iraqi official said.

By Tsvetana Paraskova for Oilprice.com

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  • Filip Subocz on January 10 2018 said:
    no wonder, the 2009-2011 auctions were simply a joke... 1.50 US-$ per barrel + payment later for the field development costs the companies have to pay from their cash first... LUKOil reveiced "compensation oil", one strong year (over 10 million tons crude), but than only ~7 and next year was 2016 and only data for first 10 months, and these 10 months were over 3 million tons and the other 2 months make maybe a total of 4 million tons + 50/50 with the joint venture per barrel produced (in the time Iraq wanted it, but later they reduced the oil, also because of cuts but the war was a reason too, so no penalty or less payment for the companies but less production, less money... Total S.A. from France stopped talking with Baghdad... they make their deals with the Kurds after some "problems" with the Iraqi Conditions and they have no contract so they produce in the autonomous kurdish region which has a lot of oil too....

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