* Profits from Iraq oil production limited, sources say
* Shell seeks to retain its Iraq gas production
* Sale part of global $30bln disposal programme
By Ron Bousso and Dmitry Zhdannikov
LONDON, Nov 28 Royal Dutch Shell is
considering selling out of its oil fields in Iraq as part of its
global $30 billion asset disposal programme, industry sources
said on Monday.
Shell is seeking to slim down its vast oil and gas portfolio
following the $54 billion acquisition of BG Group in February,
which transformed it into the world's top liquefied natural gas
With oil prices having slumped since 2014 the company wants
to focus on business areas with the highest returns such as LNG
and deepwater oil production in Brazil and the Gulf of Mexico.
A spokesman for Shell in London declined to comment.
The Anglo-Dutch company, which has been present in Iraq for
over a century, has found only limited financial benefits in
recent years from its involvement in Iraq's oil production,
where it is paid in crude oil but has limited say on production
strategy, the sources said.
However, Shell continues to see value in developing its gas
business in Iraq and is not interested in selling those
interests, the sources said.
Iraq accounted for around 4.4 percent of Shell's total oil
and gas production in 2015, according to its 2015 annual report.
The move to sell the oil interests highlights the
difficulties Iraq faces in its efforts to increase crude output
as foreign oil companies such as Shell have found the terms of
the production service contracts unappealing.
The Anglo-Dutch is the operator of the giant Majnoon field
near Basrah in southern Iraq which started production in 2014.
Iraq signed contracts with a large number of oil majors
around six years ago as it emerged from years of sanctions and
Baghdad initially wanted to rival Saudi Arabia by reaching
production of over 10 million barrels per day (bpd) but red
tape, corruption and poor infrastructure was blamed for delaying
projects, which resulted in oil output projections being halved.
National output has nevertheless recently risen sharply to
around 4.7 million bpd as some projects started paying off. Iraq
has been pushing the foreign companies including BP,
Lukoil, Exxon Mobil, Shell and China National
Petroleum Corp to increase their investments to give
it further production gains.
Shell holds a 45 percent interest in the Majnoon oil field
that it operates under a technical service contract that expires
in 2030, according to its 2015 annual report. Malaysia's
national oil company Petronas holds a 30 percent stake
in the field while the Iraqi government holds the remaining 25
Production from Majnoon averaged 206,000 barrels per day in
Shell also has a 20 percent interest in the West Qurna 1
field, which is operated by Exxon.
(Editing by Greg Mahlich)