(EnergyAsia, June 22 2011, Wednesday) — Shell said the consortium that it is leading will install the first of 15 production wells next month and undertake other infrastructure investments to develop the Majnoon oilfield in Iraq. The consortium’s other members include Petronas, Missan Oil Company and Southern Oil Company (SOC).
In an interview with EnergyExchange, Hans Nijkamp, Shell vice president and country chairman for Iraq, said contractor Petrofac will add oil pipelines, upgrade two de-gassing stations and construct a central processing facility that will include two new 50,000 b/d capacity early production systems.
Mr Nijkamp’s interview focused on the development of the Majnoon oilfield and Iraq’s South Gas Utilisation Project.
He will be speaking in further detail at the “Iraq 2011: Future Energy” conference which takes place in Istanbul, Turkey on September 26 to 29.
He said: “In March 2011, following approval from the Iraqi authorities, Shell, Petronas, Missan Oil Company and Southern Oil Company (SOC) awarded Petrofac a contract for the development of the Majnoon oilfield. The Shell Majnoon Camp is now complete and the in-country team have moved in which allows us to work closer with our SOC colleagues in the field.
“The Ministry of Oil and SOC asked Shell to build and enhance the evacuation route for the First Commercial Production (FCP) in Majnoon.  We are providing project management services while construction and operations are SOC’s overall responsibility.
“We have also initiated five social investment projects with communities directly impacted by our Majnoon operations. These include a road safety awareness programme, solar-powered street lighting and initiatives in healthcare, infrastructure and education.
“Shell has awarded at least 360 jobs to people in local communities. We are working with Iraqi firms to ensure we manage and maintain the tender process, ensure equal job allocation within different communities and that individuals have the right qualifications.
“The FCP in Majnoon will build on existing infrastructure to install a further 15 production wells (the first one by July 2011), install additional pipelines and upgrade two degassing stations.  It will also involve constructing a new central processing facility to include two new 50,000 b/d capacity early production systems.”
The Energy Exchange: Earlier this year, Iraq gave initial approval for Shell to build its own dock for delivery of heavy equipment to Majnoon. Is that now complete?
Hans Nijkamp: “Shell recently concluded a geographical survey of the Shatt Al Arab, which produced positive results. We are now able to use it as a route to transport equipment to Majnoon and minimise road transport. We are also in the process of constructing a jetty.”
The Energy Exchange: There is a lot of talk about Shell and its US$12 billion Iraq gas deal. What is the status of the deal? Why is it being delayed?
Hans Nijkamp: “We believe that the South Gas Utilisation Project is important and it will enable Iraq to make the best use of its natural gas.  We are working with our Iraq partners to reach final agreements as soon as possible.
“A number of external reviews have been carried out by international firms on behalf of the Ministry of Oil and it has also taken Shell 250,000 engineering man-hours on site to assess the scope of work. Shell and Mitsubishi are now ready for execution of the project.
“The Ministry and Shell have agreed that the investment will focus on making more gas available to the domestic market to fuel power generation, which is badly needed. Only when the domestic demand is met, can the parties progress to an export project. The Ministry maintains control over this decision through its majority shareholding in Basrah Gas Company (BGC).  We will rehabilitate and maintain the existing infrastructure and build new gas treatment plants as production increases.
“License Round 1 (LR1) contracts explicitly excluded gas, as the gas facilities of the three LR1 fields are shared and cannot be easily split. This will allow Iraq to develop more midstream companies to gather and commercialise gas coming from LR2 and LR3. Some 700 million standard cubic feet per day are currently flared in the south of Iraq – this is sufficient to generate estimated 4500 MW.”
Iraq has 6,500MW of power generation capacity, can produce an estimated 4,000 tons per day of LPG (equivalent to 320,000 LPG cooking cylinders per day), and 770 tons per day of condensates (enough to fuel 75,000 vehicles).