The Ministry of Oil in Iraq said Petronas has confirmed its exit from Iraq’s Majnoon concession along with joint stakeholder Shell, after the Iraqi oil ministry announced it would assume control of the field.
“Petronas confirms its exit from the Majnoon oilfield, Iraq, together with Shell. We will be working with Shell on the handover of the field to the Basra Oil Company,” a spokeswoman for Petronas said according a report from The National in the United Arab Emirates.
The Petronas official said an announcement will be made once details of the handover is finalised. Petronas had entered Iraq in 2009 when it won the rights to develop crude deposits at the Garraf oil field with Japan Petroleum Exploration Co.
The Malaysian state firm will relinquish its minority stake of 30 per cent along with Shell, which held a 45 per cent interest by June 2018.
The Iraqi oil ministry awarded the concession in Majnoon, one of the world’s largest oil fields with estimated reserves of 38 billion barrels, to the Anglo-Dutch oil major in 2010 under a technical services contract.
Shell was tasked with raising production from the field, littered then with mines and weapons from the Iran-Iraq war in the 1980s to 1.8 million barrels per day (bpd) by 2017, a target the oil company found daunting. Following the fall in oil prices, Shell saw a steep decline in profitability per barrel of oil and subsequently announced its decision to quit in September.
This confirms news reports that circulated in October saying Petronas will follow the Royal Dutch Shell Plc in seeking to withdraw from Majnoon, which is one of the country’s largest oil fields with about 200,000 barrels a day of production.
In Oct, Petronas said it was looking to sell some oil and gas assets owned by its Canadian unit Progress Energy, news reports said citing Petronas’ adviser BMO Capital Markets said.
The potential sale marks a further retreat by Petronas in Canada after it scrapped plans for a US$29 billion (RM122.38 billion) liquefied natural gas export project in British Columbia in July.
The asset on the block has a base production rate of about 5,500 barrels of oil equivalent per day and includes more than 400,000 gross acres in the Deep Basin with a 63% working interest, BMO said.
The sale would also include ownership in three gas plants and an extensive pipeline network, it said.
On Thursday, the Iraqi oil ministry announced it had put together a new management team to oversee the transition of interest back to the state. It also outlined a target to ramp up production to 400,000 bpd from the current level of 235,000 bpd “over the coming years”, without specifying a timeline, said the newspaper.
Following its exit, the Malaysian firm’s key interest in Iraq is through its majority stake in the Garraf oil field (45 per cent) in the southern Dhi Qar province, from where production currently stands at 100,000 bpd. Its other interests include minority stakes in the Halfaya and Badra concessions, also in the south, said The National.
In July, while the Malaysian energy company said it remained committed to developing its gas assets in Canada, it also announced it has, along with its partners, decided not to proceed with the Pacific NorthWest LNG project at Port Edward in British Columbia in Canada.
“The decision was made after a careful and total review of the project amid changes in market conditions,” the company said in a media release dated July 2017.
Petronas’ Executive Vice President & Chief Executive Officer Upstream, Anuar Taib then said: “We are disappointed that the extremely challenging environment brought about by the prolonged depressed prices and shifts in the energy industry have led us to this decision.”
“We, along with our North Montney Joint Venture partners, remain committed to developing our significant natural gas assets in Canada and will continue to explore all options as part of our long-term investment strategy moving forward,” added Anuar.
The Malaysian state-owned energy company were to invest massively in the proposed US$29 billion LNG project in western Canada.
It is a blow to Canada’s ambitions to become a global LNG player but years of delay due to collapsing prices were expected said experts.
However, Petronas said its commitment in Canada continues through Progress Energy Canada Ltd and its world-class inventory of natural gas resources where the subsidiary plays a key role in supporting the Malaysian company’s growth strategy in North America.