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PETROFAC, the UK oil services contractor, has been awarded a contract by Shell and Petronas for development of the Majnoon oil field in southern Iraq.

Under the terms of the contract, Petrofac will provide engineering, procurement, fabrication and construction management services for the development of a new early production system comprising two trains, each with a capacity of 50,000 bbl/d, along with upgrading of existing brownfield facilities.

Completion of the project is scheduled for Q4 of 2012 and could be extended to include maintenance for a further $70m, said Ole Myklestad, managing director of Shell in Iraq.

David Lufkin, Petrofac’s head of business development, has reportedly said that the company is planning to establish an office in Basra and a training centre as well as other facilities to support the contract.

The Majnoon oil field is one of the largest in the world and is estimated to contain around one third of Iraq’s reserves. Plans are for the Shell-led consortium to increase production from 45,000 bbl/d prior to winning the contract in late 2009 to 1.8m bbl/d across the course of the 20-year contract.

Under the terms of the development and production service contract, Iraq maintains a 25% interest in the field, with Shell owning 45% and Petronas the remaining 30%.