Nippon to Invest $8B in Iraq's Nassiriyah Field

ISTANBUL (Dow Jones), Oct. 19, 2009

Japan's Nippon Corp. is expected to invest up to $8 billion to develop the Nassiriyah oil field in the country's south, a senior Iraqi oil official said Monday.

"Nippon will need that money to develop the field and to build a nearby power station," the official with Iraq's South Oil Co. told reporters on the sidelines of a workshop on Iraq's second bidding round being held in Istanbul.

Nippon could take output from the field to 200,000 barrels a day in 24 months of development, said Iraqi oil minister's adviser Jabbar Leaby. He said output from the field is to reach 100,000 barrels a day during the first 18 months.

Nassiriyah is currently pumping 20,000 barrels a day.

The Iraqi senior official also said Nippon, which is teaming up with Japan's Inpex Corp. and JGC Corp., would also build a refinery in Nassiriyah with a processing capacity of 300,000 barrels a day.

He said some financial issues needed to be resolved before the deal is signed.

The Japanese consortium and government would jointly finance the deal, he added.

Abdul Mahdy al-Ameedi, head of the Iraqi Oil Ministry's Petroleum Contracts and Licensing Directorate, told a news conference he held Monday that the ministry is meeting with Nippon Nov. 1 to finalize the deal.

Italy's Eni SpA is also pursuing the project but the ministry will be meeting only with Nippon and its Japanese partners, Ameedi said. However, he didn't say why meetings would only be taking place with Nippon.

Eni said Monday that it is likely that it will withdraw from Nassiriyah oil field. Ameedi confirmed that saying Eni is no more a bidder for Nassiriyah.

Iraq is aiming to sign an engineering, procurement and construction contract to develop the Nassiriyah field, located in the Dhi Qar governate, which has estimated proven reserves of 4.4 billion barrels. The field isn't included in the government's two oil and gas bidding rounds.

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