Shell,ENI to drill new wells at Iraq’s oilfields

Royal Dutch Shell and Italy’s ENI will drill new wells at Iraq’s Majnoon and Zubair oilfields as part of plans to help boost output and propel the country to the status of a major oil producer.

An ENI executive said on Tuesday the company would drill up to 10 wells by the end of the year at Zubair, while a Shell official told Reuters that his firm planned to drill 15 new wells over the next two years at Majnoon.

Both ENI and Shell are part of consortiums that struck a series of deals with Iraq last year which it hopes will help raise its production capacity to Saudi Arabian levels of 12 million bpd in seven years from 2.5 million bpd now.

ENI’s vice president for its Iraq programme, Gino Giannone, said he expected output at Zubair to be between 250,000 and 300,000 bpd by the end of this year.

“Production should reach about 600,000 barrels per day after three years after the approval of the rehabilitation plan, (for the Zubair oilfield),” Giannone told reporters.

“From now, we should build 9 to 10 wells until the end of 2010.”

Current output from Zubair is about 180,000 bpd, an official with Iraq’s South Oil Company told Reuters.

MAJNOON OUTPUT TO RISE

Iraq, in desperate need of cash to rebuild after years of economic sanctions and underinvestment, has opened its vast oil reserves — the third-largest in the world — to global oil companies.

Shell, which partnered with Malaysia’s state-run Petronas to develop Majnoon, said it hoped the new wells it plans to drill at the supergiant field would help lift production to 175,000 bpd in 2012.

“We will need to drill 15 new wells in the next two years for Majnoon oilfield,” Marco Marsili, commercial general manager for Shell in Iraq, told Reuters.

The 12.6 billion barrel Majnoon oilfield is one of the world’s biggest, although its current output is just 50,000 bpd.

International companies are moving ahead with development work at oilfields despite a political vacuum in Iraq after a general election in March produced no outright winner and raised concerns of increased violence in the country.

ENI, which led a consortium that included U.S.-based Occidental Petroleum Corp and South Korea’s KOGAS to develop Iraq’s 4 billion barrel Zubair field, plans to invest about $20 billion in it over the 20-year term of the contract, which can be extended to 25 years.

Giannone said the output estimates were based on how fast Iraq’s state-run South Oil Co. could move ahead with issuing new tenders to operate the field, including rehabilitation and demining, as well as obtaining equipment.