ABU DHABI, Nov 10 (Reuters) - Operations at Iraq's biggest oilfield, Rumaila, have not been affected by sliding oil prices and the government's battle against Islamic State militants, a senior executive at developer BP said on Monday.
Under a service agreement signed between Baghdad, BP and its Chinese partner CNPC to develop Rumaila, the companies will boost production to 2.1 million barrels per day (bpd) by 2024. Investments in the fields are made by the foreign oil firms, who then receive pay-per-barrel remuneration fees.
Iraq's finance minister said this month that the cost of fighting Islamic State was undermining efforts to keep the country functioning and that the government had not been able to present a 2014 budget to parliament yet.
At the same time, oil prices have fallen from $115 a barrel in June to around $83 on Monday. Baghdad's fiscal breakeven price in 2014 is $109.4 a barrel, according to the International Monetary Fund.
The contract is one in a series of deals signed with international oil companies to raise Iraq's output capacity to around 8.5 million bpd by 2020. Industry sources have said there have been some minor delays in Baghdad paying remuneration fees.
However Michael Townshend, president of BP in Iraq, in Abu Dhabi, said production at Rumaila had not been affected by the oil price drop or the security situation.
"We have not had delays," he said, referring to payments from the government.
"Down in Rumaila work is going on. We never pulled out during the year, we just kept work ongoing, and that has been actually largely unaffected by the security situation," he said.
Current output from Rumaila is around 1.3 million bpd.
BP also has an agreement with the Ministry of Oil to help arrest declining production at the giant northern Kirkuk field, currently being disputed between Baghdad and Iraq's autonomous Kurdish region.
Under the deal, BP works on the Baghdad-administered side of the border, on the Baba and Avana geological formations. Kirkuk's third formation, Khurmala, is controlled by the Kurdistan Regional Government.
In July, Kurdish forces seized the field. The Kurdish region has started to pump crude from the Avana dome.
Townshend said BP still had contractors in Kirkuk and that some parts of the field remained under the administration of Baghdad and were being operated by state-run North Oil Company (NOC).
"We still work with NOC and the Ministry of Oil. We still advise them on Avana and Baba domes," he said.
(Reporting by Rania El Gamal, Maha El Dahan, Marin Dokoupil and Stanley Carvalho; Editing by Pravin Char)
Copyright 2017 Thomson Reuters. Click for Restrictions.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you