Iraq’s South Oil Company has agreed an initial development plan with UK/Dutch oil major Shell and Malaysia’s Petronas for the Majnoon oilfield.

The first phase of production will target 175,000 barrels a day (b/d) of crude oil within two years from the 12.6 billion barrel field, which lies 60 kilometres from Basra in the south of the country.

The companies will now tender the drilling of 15 new wells and the construction of two crude processing plants with a combined capacity of 100,000 b/d, Reuters reports.

In addition, the current facility at the field will be expanded to handle 120,000 b/d, up from the present 100,000 b/d.

According to Samuel Ciszuk, Middle East analyst at IHS Global Insight, the initial engineering studies and first-phase expansion planning are already well under way across the country, given the short timeframe specified by the oil ministry for work to start.

“Full-scale on-the-ground mobilisation is still some time off, but in several cases oilfield service companies and rig operators are already finalising their operating bases in Iraq’s south, facilitating the deployment of drilling rigs in larger numbers relatively soon”, says Cizsuk.

Shell and Petronas were awarded technical service contracts for the field in Iraq’s second oil field licensing round in December last year. Their bid requires them to raise production to 1.8 million b/d over seven years, from the current 45,000 b/d for which they will receive $1.39 a barrel in remuneration (MEED 2:2:10).