Baker Hughes Wins $640M Iraq Oil-Drilling Contract

AMMAN (Dow Jones Newswires), Dec. 20, 2011

U.S. oil-services company Baker Hughes Inc. (BHI) has secured a contract worth up to $640 million to drill 60 wells at Iraq's southern Zubair oil field, according to people familiar with the contract.

An Iraqi government spokesman earlier Tuesday said the Iraqi government and a consortium led by Italy's Eni SpA (E) had awarded the contract to an unnamed U.S. company.

Ali Al Dabbagh said the council of ministers approved a recommendation submitted by the oil ministry to award the contract to the American company.

Giant oil-field services companies such as Schlumberger AG (SLBS.VI), Weatherford International Ltd. (WFT) and Halliburton Co. (HAL) have lost the deal to Baker Hughes, the people familiar with the contract said.

Drilling would be completed in three years on a turn-key basis, Dabbagh said.

The 20-year Zubair service contract was awarded at an Iraqi licensing auction held in 2009 to the Eni-led group, which also includes U.S. Occidental Petroleum Corp. (OXY) and Korea Gas Corp. (036460.SE), or Kogas.

The Zubair field--one of the largest of Iraq's oil fields--was producing 195,000 barrels a day before it was awarded to the Eni-led group. Production has since reached about 300,000 barrels a day and is expected to rise to a plateau of 1.125 million barrels a day in 2016 as the full field-development plan is completed.

Earlier this year, Baker Hughes won a deal from OAO Lukoil Holdings (LKOH.RS) to drill 23 wells in Iraq's super-giant West Qurna phase two oil field in southern Iraq.

Copyright (c) 2011 Dow Jones & Company, Inc.


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.