Iraq oks Shell plan to build its own dock

Sun Jan 2, 2011 10:20pm IST

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* Shell may build dock in Iraqi waterway

* Speed up delivery of oilfield equipment

By Aref Mohammed

BASRA, Iraq, Jan 2 (Reuters) - Royal Dutch Shell (RDSa.L) may build its own dock in Iraq's Shatt al-Arab waterway to speed up delivery of heavy equipment to the supergiant Majnoon oilfield which the oil major is developing with a Malaysian partner.

The head of the General Company of Iraqi Ports, Salah Kudhair, told Reuters the company had given initial approval to a proposal by Shell to build a 25 metre quay to ship equipment from the Umm Qasr sea port to Majnoon through the waterway.

That would be faster, safer and much easier than transporting the materials by truck.

"Shell asked to build its own dock on the Shatt al-Arab at their own expense and we gave them an initial approval," Kudhair said in an interview in the oil hub city of Basra.

Shell has started conducting a survey and suggested a joint management committee should run the dock.

The Shatt al-Arab, a waterway formed by the confluence of the Tigris and Euphrates rivers, empties into the Gulf below Iraq's port city of Basra and is Iraq's only shipping outlet.

Oil industry sources confirmed the proposal had been submitted.

"Shell is looking at a number of potential options to mobilize equipment later in the year, and this is an initial survey to assess the feasibility of using Shatt al-Arab," one source said, asking not to be identified.

Shell, Europe's largest oil company, and Malaysia's Petronas [PETR.UL] won a contract in 2009 to develop Majnoon, one of the world's biggest oilfields.

The contract was one of a series awarded by Iraq to foreign firms that could one day more than quadruple its oil output capacity to 12 million barrels per day, rivalling oil power Saudi Arabia.

Neglect, under-investment, combined with red tape, corruption and bureaucracy have left Umm Qasr port, near Basra, ill-equipped to deal with the demands of oil majors trying to pour tonnes of equipment into Iraq.

A second industry source said Exxon Mobil (XOM.N), which is developing Iraq's West Qurna Phase One oilfield, another supergiant, was watching Shell's proposal for a dock in the Shatt al-Arab closely. (Additional reporting by Ahmed Rasheed; Editing by Michael Christie and Erica Billingham)

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