Royal Dutch Shell has committed to exiting the Majnoon oilfield in Iraq before July next year. Operation of the oilfield will be handed over to Basra Oil Co, a state-run corporation. In a letter which was signed by Jabar Luaibi, the oil minister in Iraq, approval was given to Shell to exit the Majnoon oilfield which began production three years ago.
According to two oil officials in Iraq a deal was reached after a meeting between Basra Oil and Royal Dutch Shell. Per the oil officials the Majnoon oilfield produces approximately 235,000 barrels of crude on a daily basis. Under the exit deal Iraqi workers that Shell hired and trained will retain the jobs despite the fact that another entity will handle the development operations of the Majnoon oilfield.
Basra Gas Company
After the exit Shell will concentrate on developing and growing Basra Gas Company, a joint venture of Petrochemical Project NEBRAS, Mitusibish, South Gas Company and Royal Dutch Shell.
The exit of the oil major from Majnoon oilfield comes at a time when preliminary government data is showing the crude oil production has reached an all-time high in the United States following the recovery in oil prices. Last week the amount of barrels of crude that were produced per day in the U.S. reached 9.62 million partly due to increased activity from shale drillers according to the Energy Information Administration. The previous record had been set in June 2015 prior to the crash in oil prices that has seen output in the United States average around 8.4 million barrels per day.
While the figures could be revised, the stubbornly high output in the United States is likely to persist and will continue weighing on the markets. A Petroleum Status Report released last week also indicated that exports by the world’s biggest economy reach an all-time record high of over two million barrels per day.
The efforts of major oil producers around the world have been frustrated in their efforts to reduce stockpiles of oil and boost prices by American shale drillers who make use of advanced drilling methods in unlocking gas and oil from rock formations. However OPEC members as well as non-OPEC members such as Russia reached a deal to proportionally cut output in order to reduce the glut and this has seen a price recovery.