Iraq has given the go-ahead for Royal Dutch Shell to build a dock in the Shatt al-Arab waterway, to help move heavy equipment to the Majnoon oilfield.
Shell is to fund construction of the 25-metre quay, which will be used to move materials from the sea port at Umm Qasr near Basra to the Majnoon oilfield it is developing—a transportation method that is faster, safer and easier than moving materials by truck.
The Shatt al-Arab, a waterway formed by the confluence of the Tigris and Euphrates rivers, empties into the Gulf below the port city of Basra and is Iraq's only shipping outlet. The port at Umm Qasr is currently insufficiently equipped to deal with the needs of oil majors trying to transport equipment into Iraq.
Majnoon, which lies in both the Basra and Maysan provinces, has estimated crude reserves of about 12 billion barrels and 9.5 trillion cubic feet of gas. Together with Petronas of Malaysia, Shell won a 20-year service contract in 2009 to raise output from Majnoon to 1.8 million barrels a day. Production is currently around 70,000 barrels a day.
Iraq, home to the world’s fifth-biggest oil reserves, is encouraging foreign funding and expertise in order to help it boost energy exports and grow its economy. The government plans to build offshore mooring facilities in the south of the country, which are expected to more than double export capacity to 4.5 million barrels a day by mid-2012.
The country hopes that with the aid of foreign investment, it will eventually be able to quadruple its oil output capacity to 12 million barrels per day, rivalling oil power Saudi Arabia.
Shell, the lead operator of Majnoon, holds a 45 per cent stake; Petronas holds 30 per cent; and the Iraqi state has 25 per cent.
