Royal Dutch Shell (RDS.A) has won a contract to redevelop Iraq’s massive Majnoon oil field. Located in southern Iraq, the Majnoon field holds an estimated 12.8 billion barrels of oil.
 
Shell will operate the Majnoon project and hold a 45% share. Petronas, Malaysia’s state oil company will hold 30% and Iraq will hold the rest.
 
Shell has accepted a very low fee of $1.39 a barrel and promised to boost the Majnoon field’s production to 1.8 million barrels a day from the current production of 46,000 barrels per day.
 
Shell owns one of the largest integrated oil and gas businesses in the world. The company has operations all over the world and is involved in various activities related to oil and natural gas, chemicals, power generation, renewable energy resources and other energy related businesses.
 
While Shell has been lagging along with its peer group in terms of upstream growth prospects, the recent contract award will definitely be a significant upside. In the last week, Shell also entered into an agreement to develop shale gas resources in southwestern China’s Sichuan province with PetroChina Co. (PTR).
 
In addition, during November, the company had designed a development plan in the Gulf of Mexico (GoM) for West Boreas discovery, which may hold 100 million barrels of resources.
 
While the current strategy to undertake major upstream projects are steps in the right direction, it remains to be seen how the company moves the niddle towards its stated goal of achieving top-quartile performance.
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