Exclusive: Iraq pipeline delays threaten Shell's Majnoon

EPCC OF Export Pipeline for Garraf Contract Area Client: Petronas Caligari Iraq Holding B.V. End User: Iraqi South Oil Company / Ministry of Oil. Project Descreption The project is EPCC of the export pipeline for Garraf Contract Area to export the crude oil from the FCP at Garraf to Ahdep Pipeline which exports the crude oil further to the government depot at Nasseryah city. The project consists of 8km of 18" pipeline with the related facilities such as fiberoptic, leak detection system, launching and recieving stations, 2 block valve stations and the required tie-ins. The project consists as well around 500m river crossing by HDD method. MEE has provided the HDD machine first time to the Iraq market and provided the experts required to perform the job and train the Iraqi experts on this technology. MEE has performed the engineering phase in its engineering offices in UAE and sourced reliable vendors worldwide through its office in UAE and USA to ensure an optimum performance for the project. Construction has started in Dec. 2011 and the project is in its final levels tostart the commissioning phase in July 2012. W91GY0-09-C-0219 - Contract was with USACE / GRC. - End User Iraqi Ministry of Defence. - Project Period was 120 days. MEE was awarded this project in 2009 as EPCC the project is for design and construct a Vynil structure maintenance facility with a total area of 372 sq.m and 7m peak height. MEE performed the structural, HVAC, Electrical and lighting design and provided Clamshell brand structure based on MEE design. the project included lighting, dors, windows, roll up doors, HVAC system, electrical distribution system and electrical connections to the sources. The project was completed at time and turned over to the client with high satisfaction. AMI-CON-2009-021 - Contract and owner was UN Assistance Mission to Iraq (UNAMI). - Project cost with modifications: $848,705. - The project started in September 2009 and turned over to the client in March 2010. MEE was awarded this project as EPCC contract. the job included doing the static and dynamic analysis for 120mm mortar and design an overhead protection structure for the UNAMI HQ in Baghdad / International Zone. The job included a steel structure to bear the explosion affects including a pre-detonation layer. This project was awarded to a Qatari company and it couldn’t it failed to do the required design so it was terminated and then awarded to MEE. MEE has designed the required steel sections and did the procurements from a Turkish manufacturer. the project included as well the foundation earth works, side protection and OHP. MEE has completed the project successfully and turned over to the client with high satisfaction. ================= Sun, Aug 26 09:40 AM EDT By Ahmed Rasheed BAGHDAD (Reuters) - Delays in Iraq's pipeline construction threaten to stall production at Royal Dutch Shell's (RDSa.L) Majnoon oilfield for at least three months, forcing the field to miss a 2012 target of 175,000 barrels per day, oil ministry documents showed. Wary of losses, Shell has asked Iraq for a waiver to start recovering costs if Majnoon does not meet its first commercial production target by year-end - a contract requirement before costs can be retrieved, according to documents seen by Reuters. Shell's troubles illustrate infrastructure hurdles facing oil operators in the OPEC nation. Some oil majors have begun signing deals with Iraq's autonomous Kurdistan region, which they say offers more attractive conditions than the country's federal government in southern oilfields. Majnoon is shut for maintenance. But lagging development could put off completion of the new pipeline until the first quarter of next year, according to a Shell document filed with the oil ministry. "A key concern ... remains the uncertain delivery of the First Commercial Production (FCP) pipeline," said the official letter sent by Shell's managing director of Majnoon. Another oil ministry document showed Shell had requested the South Oil Company (SOC) chief review its proposal to start retrieving costs by the end of 2012 in case Iraq failed to provide an export route to handle Majnoon's output. "This principle will reduce significant investment risk," the document said. One senior Iraqi oil ministry official, who asked not to be identified because of the sensitive nature of the matter, acknowledged pipeline progress was slow. But he said Shell was also behind on development at Majnoon to boost output. The 12.6 billion barrel Majnoon oilfield is one of the major fields alongside Rumaila, West Qurna Phase One and Zubair that Iraq is developing with foreign companies in the south as it recovers from years of war and sanctions. In February, production at Majnoon was 54,000 bpd, Shell says, but on average for the first quarter of this year, output was 18,600 bpd, far below the planned year-end target. Production at the field was around 45,000 bpd when Shell took over in 2010. Shell has since spent around $1 billion, and planned to invest another $1 billion in 2012. OUTDATED PIPELINE The existing 28-inch Majnoon pipeline cannot cope with the projected increase in crude production. In May last year, Iraq and its partners Shell and Malaysia's Petronas awarded Dubai-based Dodsal Group a $106 million contract to build a 79-km (50-mile) pipeline from Majnoon to a crude storage depot near Zubair in southern Iraq. The oil ministry rejected the deal on costs and handed the project to an oil ministry affiliate. Oil officials say the pipeline is not expected to be finished until March 2013. Still, Iraq's contracts directorate has ruled "financial dues will be paid after the first commercial production," occurs, according to the oil ministry documents. The Iraqi oil official said state-run companies are already working to speed up pipeline construction, and China Petroleum Pipeline (CPP) was contracted recently to build part of the line. But drilling operations in Majnoon are moving at a slow pace, the official said, with only three wells completed since a contract for 15 wells was awarded in August 2010. Questioning Shell's ability to meet the 175,000 bpd 2012 target, he said two production facilities with a capacity for processing 100,000 bpd of crude, essential for increasing production, were still unfinished at Majnoon. Requests to Shell for comment on the documents were not answered. Majnoon oilfield shutdown for maintenance work on June 26 and a company spokesman said it was difficult to estimate how long the repair work would take. One ministry document said the shutdown could last at least four months starting from July 1, 2012. Majnoon is just one part of Shell's Iraq portfolio. Europe's largest oil company has a significant foothold in Iraq, with a stake in a $17 billion gas joint venture and a minority shares in the West Qurna-1 oilfield, led by Exxon Mobil (XOM.N). (Editing by Patrick Markey and Helen Massy-Beresford) ============== UPDATE 1-Shell says may miss 2012 Majnoon output target Tue, Sep 18 06:03 AM EDT DUBAI, Sept 18 (Reuters) - Royal Dutch Shell's Majnoon oilfield in Iraq, hampered by pipeline construction delays, may miss a 2012 target of 175,000 barrels per day. "It would be fair to say the progress has been slower than we originally hoped," Mark Carne, executive vice president for Middle East and North Africa at Shell Upstream International, said on Tuesday. "But I am very pleased with how the project is developing." Asked if the 2012 target of 175,000 barrels per day could slide into next year, Carne said: "It is certainly plausible". Wary of losses, Shell has asked Iraq for a waiver to start recovering costs if Majnoon, which shut for maintenance on June 26, does not meet its first commercial production target by year-end - a contract requirement before costs can be retrieved, according to documents seen by Reuters. The 12.6 billion barrel Majnoon oilfield is one of the major fields alongside Rumaila, West Qurna Phase One and Zubair that Iraq is developing with foreign companies in the south as it recovers from years of war and sanctions. In February, production at Majnoon was 54,000 bpd, Shell says, but on average for the first quarter of this year, output was 18,600 bpd, far below the planned year-end target. "(Production) varied but 54,000 bpd was probably the highest or maybe 60,000 bpd," Carne told Reuters. "It was around that because the facilities couldn't handle any more and the pipeline couldn't any more. This is the reason we're making the investment." Production at the field was around 45,000 bpd when Shell took over in 2010. Shell has since spent around $1 billion, and planned to invest another $1 billion in 2012. "The new facilities will have a capacity of 100,000 bpd and then the refurbished brownfield facilities will also have a capacity of 100,000 bpd, so when it all comes onstream, we'll be easily able to meet the 175,000 bpd," Carne said. The existing 28-inch Majnoon pipeline cannot cope with the projected increase in crude production. In May last year, Iraq and its partners Shell and Malaysia's Petronas awarded Dubai-based Dodsal Group a $106 million contract to build a 79-km (50-mile) pipeline from Majnoon to a crude storage depot near Zubair in southern Iraq. The oil ministry rejected the deal on costs and handed the project to an oil ministry affiliate. Oil officials say the pipeline is not expected to be finished until March 2013. Majnoon is just one part of Shell's Iraq portfolio. Europe's largest oil company has a significant foothold in Iraq, with a stake in a $17 billion gas joint venture and minority shares in the West Qurna-1 oilfield, led by Exxon Mobil. =========== China's CNPC overseas equity oil output up 4.6 pct in H1 Wed, Jul 11 00:52 AM EDT BEIJING, July 11 (Reuters) - Overseas equity oil and gas production of China National Petroleum Corp., parent of PetroChina , rose 4.6 percent on year to 25.3 million tonnes of oil equivalent in the first half of this year, the company said. CNPC's crude oil output at Iraq's Rumaila oilfield was 12.06 million tonnes in the January-June period, 1.93 million tonnes more than its target, the company, known as CNPC, said in an in-house newsletter seen on Wednesday. Production at Iraq's Al-Ahdab oilfield and its projects in Venezuela, Singapore and Kazakhstan also exceeded their production plans, it added without giving further details. CNPC said last month that the first phase of Iraq's Halfaya oilfield had started operating and had a production capacity of 5 million tonnes per year, or 100,000 barrels per day. (Reporting by Beijing newsroom; Editing by Ed Lane) ========== Oil law committee members named Parliament Oil and Energy Committee Chairman Adnan Janabi gives a press conference in Baghdad. 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