Majnoon oil field

The super-giant Majnoon oil field is situated in al-Basrah governorate in south-east Iraq, extending northerly toward Maysan governorate. The name Majnoon (meaning 'crazy') was due to the excessive presence of oil in a limited areas on the east of the Tigris River.

The field is around 60 km long and 15 km wide, is located 60 km northwest of Basrah city and lies mostly under man-made islands in the Hawizah marshes, close to the Iranian border.

Majnoon was discovered by Brazilian Braspetro in 1975, however development came to a halt in 1980 during the engineering phase of the project, due to the Iran-Iraq War. At the time, Braspetro had finished drilling of 20 wells and 14 drilling rigs were in service. Over the course of the war, Iran occupied and sabotaged the area. Following the war, Iraq's South Oil Company restarted the production. In the 1990s, French Total negotiated a development contract with Saddam Hussein but was ultimately unable to sign the deal due to UN sanctions imposed on Iraq. The deal was eventually annulled by Hussein in 2002. In 2007 Total and Chevron signed an agreement with the Iraqi government to explore the Majnoon field.

Contracts Negotiated
Following Iraq's second post-war licensing round in 2009, the Iraqi government signed a 20-year service contract with international oil companies Shell and Petronas to develop the Majnoon oil field. Iraqi state-owned South Oil Company and Missan Oil Company also formed part of the group, which intended to boost production to 1.8 million barrels per day (bpd) from 45,000 bpd (2010). Shell is the lead operator in the consortium with a 45% stake, Petronas holds 30% and the Iraqi state holds 25%.

The bid from Shell and Petronas beat a rival bid from France's Total and China's CNPC. The consortium pledged to increase output to 1.8 million bpd. Under the terms of the deal the companies will receive a remuneration fee of $1.39 per barrel.

Production and Export
In September 2011, Shell Vice Presidnet Hans Nijkamp announced that production was at a level of approximately 75,000 bpd. But in the first quarter of 2012 production fell. Output levels varied, with highs of 54,000 bpd but an average of only 18,600 bpd. The upper limit was as much as pipeline capacity could handle. As a result of these constraints in June 2012 a shutdown began at Majnoon for maintenance and in order to bring new production facilities online.

Regional Shell boss Mark Carne commented in 2012 that "it would be fair to say that progress has been slower than we originally hoped." But according to Shell's 2013 development programme for Majnoon, output was expected to rise above 200,000 bpd over the year, above the level needed to start recovering costs. |

Infrastructure limitations have been a key obstacle for the consortium, as the existing 28-inch Majnoon pipeline cannot cope with the projected increase in crude production. A letter from Shell's managing director at Majnoon stated that "a key concern... remains the uncertain delivery of the First Commercial Production (FCP) pipeline". The development has also suffered setbacks such as unexpected mine clearance work, delays in customs and inclement weather conditions, that hampered development. In December 2012 the discovery of an ancient Persian archaeological site at Majnoon added further complications in Shell's development of the field.

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