The Majnoon oil field in Iraq was just opened by Royal Dutch Shell (NYSE:RDSA), which is a major step in the country. The first well in the field opened on September 20, but the oil field was just officially inaugurated, reports the Wall Street Journal.
The goal right now is to produce 175,000 barrels of oil per day, and according to a spokesman for Shell that will happen by next week. It is vital that the oil company is able to hit this target because it needs to produce this amount of oil in order to recover its costs from the deal it made with the Iraqi government.
It looks like they will be able to meet this quota. According to Iraq’s deputy prime minister for energy, they estimate that the oil field is capable of producing as much as 200,000 barrels of oil per day before the end of this year.
It has been almost four years since a deal was made to develop the oil field. Shell holds a 45 percent stake in the venture. The Malaysian oil company Petrona holds a 30 percent stake, and an Iraqi state run company controls the rest of the interest.
Majnoon is in southern Iraq near the town of Basra. This oil field is just one of four that Iraq is planning to develop along with foreign companies. Oil companies that Iraq has signed deals with include Exxon Mobil (NYSE:XOM), BP (NYSE:BP), Total, and Eni SpA.
Eventually, the companies running the Majnoon field want to get production up to 1.8 million barrels per day. Currently, the country is producing 3.2 million barrels of oil a day, but it is trying to increase that to 6 million barrels eventually, says the Wall Street Journal.