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UPDATE 1-Iraq state oil company to drill 40 wells in Majnoon field

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BAGHDAD, Jan 31 (Reuters) - Iraq's Basra Oil Co has agreed a deal with state-run Iraq Drilling Co to drill 40 new oil wells in the giant southern Majnoon field, the Oil Ministry said on Thursday.

The deal will help boost output from the Majnoon oilfield to 450,000 barrels per day (bpd) in 2021, the ministry said in a statement.

Majnoon is now producing around 240,000 bpd, according to oilfield officials.

The new wells are in addition to the 40 that Iraq and U.S. company Schlumberger Ltd agreed on Dec. 19 to drill in Majnoon.

Royal Dutch Shell exited Majnoon last year, handing operations to state-run Basra Oil.

Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries, is pumping below its maximum capacity of nearly 5 million bpd in line with an agreement among OPEC and other exporters to curtail global supply. (Reporting by John Davison and Ahmed Rasheed; Editing by Dale Hudson and Susan Fenton)