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Petrofac Gets $329.7M Contract in Iraq Badra Oil Field

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Iraq and a consortium led by Russia's state oil producer OAO Gazprom Neft have awarded a $329.7 million deal to U.K.-based oil and gas services company Petrofac Ltd. to develop the untapped Badra oil field in eastern Iraq, a government spokesman said Tuesday.

Ali Al Dabbagh said Petrofac would build a central processing facility for oil production in the field. He gave no further details.

The consortium--which also includes Korea Gas Corp., or Kogas, Turkish Petroleum Corp., or TPAO, and Malaysia's Petronas--is planning to start first production from the field by mid-2013, Gazprom Neft executives had said.

Gazprom Neft-operated consortium has started last year drilling in the field with estimated proven reserves of 3 billion barrels. It plans to drill some 11 wells in the fields in three years, the executives said.

The consortium estimates total costs for the Badra project at $2 billion and plan to reach 170,000 barrels a day by 2017.

Gazprom Neft and its partners won the deal in Iraq's second postwar licensing auction held in 2009. The field is located in Wasit governorate, 160 kilometers southeast of Baghdad, and extends across the border with Iran.

Gazprom, which holds the largest stake in the consortium at 40%, would receive along with its partners a payment of $5.50 for each barrel extracted from the field as soon as the field reaches output of 15,000 barrels a day by mid-2013.

This is the second large deal for Petrofac in Iraq. Last year the company signed a deal with Royal Dutch Shell PLC, worth up to $270 million, to upgrade the super-giant Majnoon oil field.

Copyright (c) 2012 Dow Jones & Company, Inc.

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