Royal Dutch Shell and its partners Malaysia's Petronas and the Iraqi state signed Thursday a $200 million deal with U.K.-based oil and gas services company Petrofac Ltd. (PFC.LN) to design, contract and supply early production units for the development of the super-giant Majnoon oil field in southern Iraq.Under the deal, Petrofac will provide engineering, procurement and construction management services to build a new early-production system comprising two trains each with a total capacity of 50,000 barrels a day of oil.
Shell is planning to increase output from Majnoon, with estimated reserves of 12.6 billion barrels, to 175,000 barrels a day by the end of next year from current 60,000 barrels a day.
The contract can be extended to include another amount of $70 million to cover maintenance after building the facility, Ole Myklestad, managing director of Shell in Iraq, told Dow Jones Newswires.
The early-production system is expected to be completed and commissioned by the end of 2012, said David Lufkin, Petrofac's head of business development.
Shell and Petronas were awarded the deal in December 2009 to develop Majnoon field, which is located in Basra governorate. Shell owns 45% of the venture and Petronas 30%, with Iraq's state-run Missan Oil Co. holding 25%.