Shell restarts Iraq's Majnoon oil field

Updated 02 October 2013

Shell restarts Iraq's Majnoon oil field

BASRA: Royal Dutch Shell has restarted production at Iraq's Majnoon oil field, one of four giant fields core to the country's plans to boost output and avoid a slowdown in exports this year.
The Anglo-Dutch major, in charge of operations at the southern Majnoon oil field, said on Friday it aims to boost output to 175,000 barrels per day (bpd) in October.
"We can confirm that we successfully opened the wells and restarted production in Majnoon," a Shell spokesman said. "We are targeting production of 175,000 bpd in the next weeks."
Baghdad sent a letter of complaint to Shell last month for missing start-up dates at the 12-billion-barrel oil field, which was pumping about 45,000 bpd when the company took over in 2010. Shell later suspended operations to carry out maintenance.
An official from Iraq's South Oil Company, which oversees the running of the country's southern oilfields, had a more ambitious target for Majnoon.
"The test restart of the oilfield will continue until the end of September and production of around 190,000 barrels per day is expected to be reached in October," he said.
OPEC's second-biggest producer expects its output to rise by 400,000 bpd by the end of this year, with Majnoon - which straddles the border with Iran - providing a big part of that.
Shell has built a strong position in southern Iraq as operator of Majnoon, junior partner with ExxonMobil at West Qurna-1 and a partner in a natural gas project.
Baghdad's oil revival, which got under way in 2010, has slowed this year due to infrastructure and security problems, keeping output far below projected targets and sometimes even below last year's levels of 3 million bpd.
Iraq signed a series of service contracts with major oil companies such as Shell, BP, Exxon and Total at the end of 2009 to develop its oilfields, neglected for decades due to wars and sanctions.
The development of the neighboring Rumaila, Zubair and West Qurna-1 oil fields has already added 600,000 bpd.
Garraf oil field in the south, developed by Malaysia's Petronas and Japan Petroleum Exploration Co Ltd., started production of 35,000 bpd earlier this month.
Petronas also has a minority interest in Majnoon. Under the terms of the service contract, Shell vowed to raise production from Majnoon to 1.8 million bpd by 2017 for a fee of $1.39 a barrel. It has been negotiating with Baghdad to reduce the target to around 1 million bpd.

Is the Dubai economy turning the corner?

Updated 3 min 42 sec ago

Is the Dubai economy turning the corner?

  • Expo 2020 expected to boost GDP
  • Relaxation of residency rules helps real estate

LONDON: Is the Dubai economy finally turning the corner? At least one major international bank thinks so.

It follows a move by the emirate's leadership to reboot an economy that has been hit hard by corporate job losses, the introduction of VAT and a slowing real estate sector.

The UAE’s non-oil economy is likely to “turn a corner” next year with Dubai’s Expo 2020 infrastructure projects, changes to visa rules and increased government spending set to boost growth, according to a Bank of America Merrill Lynch (BofAML) research note.

Abu Dhabi National Oil Company’s (ADNOC) downstream expansion plans are also expected to drive the country’s non-oil GDP growth, said the note compiled by Middle East and North Africa (MENA) economist Jean Michel Saliba.

The Gulf country’s real GDP growth is estimated to rise to 3.5 percent in 2019 from a forecast 2.8 percent increase this year and a 1.9 percent increase in 2017, said the note published on Thursday.

Buoyed by a recovery in oil prices, Abu Dhabi approved a 50 billion dirham ($13.6 billion) three-year stimulus package in early June, which BofAML estimated could add 0.4 percentage points to non-oil GDP growth.

ADNOC’s $45 billion five-year downstream investment plan — revealed in May — is estimated to add a further 1.1 percentage point to the emirate’s non-oil growth, the report said.

The Expo 2020 event in Dubai could drive up GDP growth by 2 percentage points between 2020 and 2021, the report said, by boosting job creation, consumption and tourist numbers.

Given the improvement in oil prices, the cost of Abu Dhabi’s stimulus spending is considered “financeable” by BofAML, while Dubai’s spending plans are said to be “modest.”

Recent structural reforms, including plans to introduce long-term expatriate visas for up to 10 years, could help to boost the UAE’s population and consumer demand, the note said.

“The new UAE long-term and temporary visa system should facilitate retention of white-collar expatriates,” it said.

“As we expect longer-term visas not to be linked to continued employment, this may increase expatriate incentives to acquire property and support real estate demand.”

The UAE announced in May that it would allow 100 percent foreign ownership of UAE companies in specific industries by the end of the year, a move that could give a welcome boost to foreign direct investment in the country.

A new UAE-wide insurance scheme may provide a one-time boost to corporate profits, the note said.

The UAE cabinet approved plans in June for the insurance scheme to replace the previous system whereby employers had to provide a monetary guarantee to cover each of their workforce.

The move is likely to free up capital that companies could choose to sit on or to reinvest, BofAML said.

“Should corporates invest, we estimate this could lead to a one-off 0.1percentage point boost to UAE non-hydrocarbon real GDP growth,” the report said.