Shell may miss oil target in Iraq field

“It would be fair to say the progress has been slower than we originally hoped,” Mark Carne, executive vice president for Middle East and North Africa at Shell Upstream International, said.

“But I am very pleased with how the project is developing.”

Asked if the 2012 target of 175,000 barrels per day could slide into next year, Mr Carne said: “It is certainly plausible”.

Wary of losses, Shell has asked Iraq for a waiver to start recovering costs if Majnoon, which shut for maintenance on June 26, does not meet its first commercial production target by year-end – a contract requirement before costs can be retrieved, according reports.

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

In February, production at Majnoon was 54,000 bpd, Shell says, but on average for the first quarter of this year, output was 18,600 bpd, far below the planned year-end target.

“(Production) varied but 54,000 bpd was probably the highest or maybe 60,000 bpd,” Mr Carne said. “It was around that because the facilities couldn’t handle any more. This is the reason we’re making the investment.”

Production at the field was around 45,000 bpd when Shell took over in 2010. Shell has since spent around $1bn.