According to Jabar al-Luaibi, the Iraqi Oil Minister, the terms that Total SA (ADR)(NYSE:TOT) and Chevron Corporation (NYSE:CVX) will be offered to develop Majnoon oilfield maybe be different from the ones that were offered to Anglo-Dutch oil giant, Royal Dutch Shell plc (ADR)(NYSE:RDS.A). The Oil Minister further said that the country would engage in the development of the oil field which is located in southern Iraq independently till a foreign partner is found. No firm has been chosen yet.
This comes following an announcement by Royal Dutch Shell that it intends to quit the Majnoon oil field after which Total and Chevron expressed interest. At the time Shell said its reasons for quitting the oil field were due to changes in fiscal terms that were unfavorable. The Majnoon oil field produces approximately 200,000 barrels per day. At the time neither Chevron nor Total could disclose whether they were in talks to acquire the stake held by Royal Dutch Shell in the oil field.
OPEC production cuts
Towards the end of last year Iraq had reluctantly agreed to take part in production cuts in a bid to end the global oil glut that had caused prices to plummet. As part of the deal Iraq was required to reduce production by about 210,000 barrels per day. The Middle Eastern country has however vowed that it will keep expanding its oil production capacity in order to be ready for increased production once the OPEC deal comes to an end. Currently Iraq is the second-biggest oil producer among OPEC countries.
Prior to the start of the OPEC cuts Iraq was producing around 4.5 million barrels per day. Per consultant Wood Mackenzie, development of oil fields such as Zubair, Halfaya and West Qurna-1 in Iraq could see the oil production capacity in the country rise to approximately five million barrels per day.
In the statement which indicated its intentions to leave Majnoon Royal Dutch Shell argued that the move would enable the oil giant to focus on developing and growing Basrah Gas Company as well as Nebras Petrochemicals Project.
On Friday shares of Chevron Corporation rose by 0.37% to close the day at $118.64.