Shell earmarks $1.2b to develop Iraq's major Majnoon oilfield

BASRA, Iraq (REUTERS) - Royal Dutch Shell will spend more than US$1 billion (S$1.24 billion) this year developing one of Iraq major oilfields, where it will resume operations on May 1, officials said on Saturday.

"The figure for the budget will exceed US$1 billion," said Mr Mehdi Badi, the head of the joint management committee for the field.

The Majnoon field was shut down in June for maintenance and to bring new production facilities online. When it comes back on stream, initial output will be 100,000 barrels per day (bpd), which will quickly rise to 200,000, Oil Minister Abdul Kareem Luaibi said on Saturday.

The production re-start could help boost Iraq's exports towards the 2.9 million bpd average projected in the budget, making up for a cut by the country's autonomous north. Iraq exported an average 2.538 million bpd in February, Mr Luaibi said, up from 2.359 million the previous month, but still below their peak.

"The significant factor which affected exports was the weather... but we hope, these months... we will compensate the lost amounts of the first season," he said.

At their highest, oil exports from Iraq were above 2.6 million bpd, but last December its Kurdistan region stopped shipping crude because of a row with the central government over payments to oil companies operating in the region.

In recent years, the Kurds have signed deals on their own terms with the likes of Exxon Mobil, Chevron and Russia's Gazprom Neft, riling Baghdad, which rejects the contracts as illegal.

Iraq has the world's fourth-largest oil reserves and is targeting exports of 6 million bpd by 2017.

Mr Luiabi told Reuters the oil ministry planned to invest some US$130 billion in the upstream sector alone, as well as US$25 billion in downstream projects and a further US$18 billion in the gas sector.

"All these projects are expected to generate profits of between US$500 billion and US$600 billion for the next five years," Mr Luaibi told Reuters.