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By Aref Mohammed
BASRA, Iraq (Reuters) - Iraq has approved the sale by Royal Dutch Shell of the company's 20 percent stake in Iraq's West Qurna 1 oilfield to Japan's Itochu Corp, a senior Iraqi oil official said on Wednesday.
The deal comes as the Anglo-Dutch company agreed to exit the Majnoon oil venture, one of the largest fields in OPEC member Iraq, and hand over its operation to the state-run Basra Oil Co. (BOC) by the end of June 2018.
"Shell sold its stake in West Qurna 1 to Itochu and the oil ministry approved it. We met with Itochu and discussed the required financial investments and operations at the field," Ihsan Abdul Jabbar, the head of state-run BOC, told Reuters in an interview.
Shell and Itochu were not immediately available for comment.
Abdul Jabbar also said BOC had reached an agreement with KBR Inc, a U.S. engineering and construction firm, to help manage projects to develop production capacity at the Majnoon field.
"We are targeting to cut the cost of the projects' development by 30 percent this year," said Abdul Jabbar, adding the development cost for Majnoon set by Shell in 2017 was $1 billion.
Shell has said it is still committed to producing gas in Iraq, focusing on developing and expanding the Basra Gas Company, which processes gas from the Rumaila, West Qurna 1 and Zubair fields. It has a 44 percent stake in the joint venture.
He said the associated gas extracted from Majnoon stood at around 130 million cubic feet per day (mcf/d) and only 70 mcf/d was processed and utilised, with the rest flared.
(Additional reporting and writing by Ahmed Rasheed; Editing by Mark Potter)