Shell May Be Singing a Swan Song in Iraq
After having had a presence within Iraq for more than a century, Royal Dutch Shell has taken into consideration whether or not to close up shop within the country. While no official comment has been made, the decision would be the latest in a series of moves that’s seeking to broaden the base of the company’s energy production.
Shell’s annual report from 2015 indicated that approximately 4.4 percent of the oil they produce comes from Iraq. The country had signed a number of different oil companies to contracts back in 2010 after economic sanctions and wartime chaos had ended, allowing for a more steady production of oil to take place.
The deal that Iraq made with Shell was working fine until 2014 when the downturn in the price of oil became progressively worse. Roughly 30 months after the economic slide began, oil prices remain half of what they were at the outset.
Two key fields that Shell has financial interests are areas that would be most affected by any change in company strategic interests. These include the Majnoon field, where Shell owns a 45 percent interest and is contracted to provide technical expertise through 2030. Last year, daily oil production at the field located near Basrah amounted to 206,000 barrels.
The West Qurna 1 field is an area in which Shell has a 20 percent interest, though full operations are handled by Exxon Mobil. Despite the absence of any official wartime conflict, the continued presence of terrorist groups within key parts of the country serves as a compelling reason for such reconsideration.
Shell is focused on making their $54 billion investment in the BG Group pay off more quickly by focusing on areas like LNG and in more stable areas like the Gulf of Mexico and Brazil.