Integrated energy giant, Royal Dutch Shell plc (RDS.A - Free Report) announced the opening of the Majnoon oil fields in Iraq with the objective to boost production.
When Shell took over in 2010, the field was producing 45,000 barrels of oil per day (BOE/d). The company had later suspended work on grounds of maintenance.
Production from the first well started last month. The Shell-operated field is expected to reach production level of 175,000 BOE/d in the coming weeks. It is a target which must be met in order to recover the costs incurred while entering into the deal. The oil field is expected to produce about 200,000 BOE/d by this year end.
Shell holds a 45% interest in the Majnoon fields. Petronas, a Malaysian oil company, holds a 30% interest whereas the remaining is held by Iraq’s Missan oil company.
In Jan 2010, the Iraqi Ministry of Oil had awarded the partners a 20-year contract to develop the Majnoon prospect, which is among the largest oil fields in the world. The project is divided into two phases. Phase I includes reaching First Commercial Production (FCP) and Phase II involves development of the full field (FFD).
The giant Majnoon field is located in Basra province, in Southern Iraq and is a significant contributor to the country’s economy. It is one of the four oil fields that Iraq plans to develop with the objective of increasing total production almost twofold to 6 million barrels.
Other major oil companies with which Iraq has signed deals include BP plc (BP - Free Report) , Exxon Mobil Corporation (XOM - Free Report) and Total SA (TOT - Free Report) .
Royal Dutch Shell currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months. Among the other stocks mentioned, BP and Exxon have a Zacks Rank #3 (Hold) whereas Total has a Zacks Rank #2 (Buy).