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Friday, 13 October 2017 | MYT 12:00 AM

Petronas looks to exit from Iraq’s Majnoon field

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) plans to sell its stake in Iraq’s giant Majnoon oil field, sources said.

Petronas has decided to withdraw from its 30% participating interest in the project because it considers the returns to be too low, according to a source.

The energy firm may soon hire advisers to help find an interested party to take up the holding, the person said, asking not to be identified because the information is private.

It communicated the decision to Iraq’s oil ministry in the past few weeks, another source said.

Petronas follows 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.

Shell had a 45% interest in the Majnoon service contract, in which it was paid a fee for each barrel of oil produced above a certain level until 2030.

Petronas chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin, who took the helm in 2015, said last year he is seeking to defer projects and cut expenses by as much as RM50bil over the coming four years.

Petronas entered Iraq in 2009 when it won the rights to develop crude deposits at the Garraf oil field with Japan Petroleum Exploration Co.

Petronas is also participating in the Badra oil field through a consortium led by Gazprom PJSC and has a stake in the Halfaya field being developed by companies including PetroChina Co. Deliberations on withdrawing from Majnoon are at an early stage, and there is no certainty they would lead to a transaction, the people said.

Spokesmen at Petronas and the Iraq oil ministry’s media office said they didn’t have any immediate comment.

Shell said last month it decided to surrender its stake in Majnoon after a performance penalty and remuneration factor, applied to the field by the government since May, had a “significant impact” on commercial viability.

The field, located near the southern Iraqi city of Basra, pumped its first oil in September 2013.

Chevron Corp and Total SA have expressed readiness to help develop the Majnoon field, Iraqi Oil Minister Jabbar al-Luaibi said this week.

Iraq, the second-largest producer in the Organisation of the Petroleum Exporting Countries, reluctantly agreed in November to participate in production cuts to help end a global oil glut and has vowed to keep expanding capacity to be ready for the end of the deal next year. — Bloomberg