Iraq and its partners Royal Dutch Shell and Malaysia's Petronas have awarded Dubai-based Dodsal Group a $106 million contract to lay a pipeline at the Majnoon oilfield, an Iraqi oil official said.

Under the deal, Dodsal Group will build a 79-km (50-mile) pipeline to carry oil from the supergiant Majnoon oilfield to a crude storage depot near Zubair in southern Iraq.

The existing 28-inch Majnoon pipeline is outdated and cannot cope with the projected increase, the official, who asked not to be identified, said on Wednesday.

'Majnoon's current output is around 63,000 barrels per day, and it's expected to hit 175,000 bpd in 2012, which requires building a new pipeline to handle the output increase,' he told Reuters.

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

The eventual output target for the field is 1.8 million bpd.

Iraq has awarded a series of massive oilfield development contracts to majors such as Shell and BP with the ambitious objective of expanding its oil production capacity to 12 million bpd by 2017.

But Oil Minister Abdul-Kareem Luaibi said earlier this month that Iraq was considering cutting this goal and could renegotiate deals with global oil companies. - Reuters