Iraq Rumaila Output Resumes; Fire Out - Officials

AMMAN (Dow Jones Newswires), Sep. 21, 2011

Iraq is Wednesday resuming normal crude oil production from its supergiant Rumaila oil field, after emergency teams extinguished a fire which broke out Tuesday in a gas facility, two senior Iraqi oil officials said.

"We are resuming gradually normal production from Rumaila today," Dhiaa Jaafar, head of Iraq's largest state company the South Oil Co., told Dow Jones Newswires by telephone from Basra. "We haven't reduced our exports even one drop because of the fire."

Rumaila, operated by BP and China National Petroleum Corp., produces between 1.2 million-1.3 million barrels a day, while Iraq exports around 1.8 million barrels a day from its southern terminals in the Persian Gulf.

Ali Hussein Khudhier, head of the state-run South Gas Co. which operates the damaged gas facility, said that he had asked BP to delay output from one station because it is linked directly to the damaged gas facility.

Khudhier said fire was extinguished at 1850 local time Tuesday, but said he didn't yet know when the compressor would be repaired.

Both Jaafar and Khudhier denied news reports that one worker was killed in the fire Tuesday.

"No one [died] at the incident as the media has reported," Khudhier said. "Between 15 and 16 workers were injured and have already left hospital after receiving treatment."

Jaafar attributed the cause of fire to a gas leak at a compression station. However, an official from the South Oil Co. said Tuesday the fire was ignited by welding operations on neighboring oil production facilities. The reason for the discrepancy wasn't immediately clear.

The damaged compressor supplied natural gas from Rumaila for local consumption in the city of Basra, officials said.

In July the South Gas Co. initialed a deal with Shell and Japan's Mitsubishi, worth up to $17.5 billion, to produce gas from Rumaila, West Qurna phase 1 and Zubair oil fields, all located in Basra.

Iraq, holder of the fifth-largest gas reserves in the region estimated at 112.6 trillion cubic feet, produces 1 billion cubic feet a day. However, some 70% of this is flared due to a lack of infrastructure.

The Rumaila field produces almost half of Iraq's oil output and has more than 17 billion barrels in estimated crude reserves.

U.K.-based supermajor BP, one of the biggest players in Iraq, is involved in a push to increase the country's oil production level to rival Saudi Arabia's 9.76 million barrels a day. Iraq currently produces 2.7 million barrels a day.

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