Shell and Petronas beat a rival bid from France’s Total and China’s CNPC. Although Majnoon is a huge oil field, with reserves of 13 billion barrels of oil, it currently produces just 46,000 barrels per day.
Shell and Petronas have pledged to increase that output to 1.8 million barrels per day.
Their venture will receive a fee of $1.39 a barrel. In June this year, a winning bid to develop an Iraq oil field received $2 a barrel.
A consortium led by China’s CNPC was awarded the contract for Iraq’s Halfaya oil field. The consortium also includes Malaysia’s Petronas and France’s Total.
Halfaya, in southern Iraq near the border with Iran, is a much smaller field with reserves of 4.1 billion barrels of oil.
It requested fees of $1.40 a barrel of oil extracted from the field, and projected output would reach 535,000 barrels per day.
Map: Iraqi Oil and Gas Developments
Iraq needs the expertise of foreign companies in order to reach its goal of reviving its oil industry, which has been battered by years of war and sanctions. The country has a daily output of about 2.4 million barrels, but aims to triple that over the next few years.
Peter W. Galbraith, U.S. Adviser to Kurds, Stands to Reap Oil Profits
BAGDAD (Rigzone) – Iraq’s super-giant Majnoon will be the first in the 10 groups of oil and gas fields the country is offering to international oil companies in its second post-war licensing auction due to be held in Baghdad Friday and Saturday. The nearly 13 billion reserve field is expected to attract big players, the officials said.
French major Total SA negotiated alone Majnoon oil field in southern Iraq during the rule of Iraqi leader Saddam Hussein … now teamed up with Chevron Corp., is expected to put up a fight for the field that could produce well above 2 million barrels a day.
China National Petroleum Corp., or CNPC, Royal Dutch Shell PLC, Exxon Mobil Corp., Sinochem Corp. and Petronas could also challenge Total for Majnoon.
Protecting Iraq's oil ministry
Iraqi officials also expected a tough fight for the supergiant West Qurna Phase 2 oil field in southern Iraq, near the border with Iran.
The second super-giant oil field West Qurna Phase 2 which holds reserves of 12.9 billion barrels will be at the top of the list of oil and gas fields Saturday’s bidding round. The other smaller ones are Garraf, Badra (gas field), Middle Furat, and Najmah.
Russian oil major Lukoil Holdings clinched a production-sharing contract to develop the field during Saddam’s rule but the former leader annulled it a year before the U.S.-led invasion in 2003.
Lukoil — now with its strategic partner ConocoPhillips — is expected to make sure that it doesn’t lose the field as happened in the first bidding round. Then it was pipped to West Qurna-1 by ExxonMobil and Shell in early November despite offering the highest output plateau target — 2.35 million barrels a day — during bilateral talks.
"But I will not let myself be reduced to silence."