Iraq to Sign Rumaila Field Deal with BP, CNPC Nov 3

AMMAN (Dow Jones), Oct. 29, 2009

The Iraqi Oil Ministry will sign a deal worth billions of dollars with BP and CNPC Tuesday to develop Rumaila, Iraq's largest producing oil field, a ministry spokesman told Dow Jones Newswires Thursday.

Assem Jihad said the ministry would also sign an initial agreement with Italy's Eni SpA Sunday to develop the Zubair oil field in southern Iraq. The agreement will then be sent to the Council of Ministers for final approval, he said.

Eni and its partners Occidental Petroleum and South Korea’s Kogas made an earlier offer for a service fee of $4.40 a barrel to $2 a barrel, as set by the Iraqi oil ministry.

Eni aims to boost Zubair production from 195,000 barrels a day to a plateau of 1.125 million barrels a day in the next seven years.

The BP/CNPC contract, worth more than $15 billion, was unanimously approved by the Iraqi Council of Ministers earlier this month, a milestone in Iraq's efforts to rehabilitate its struggling oil sector.

Under the 20-year service contract, BP will hold a 38% stake in the venture, while CNPC will possess 37%. Iraq will hold the remaining 25%.

Rumaila, with estimated proven reserves of 17 - 20 billion barrels, is currently producing some 1.05 million barrels a day -- almost half of Iraq's total production.

BP and CNPC plan to increase production to 2.85 million barrels a day.

The BP-led group won the project to develop the southern Rumaila field in Iraq's first post-war bidding round, which took place at the end of June.

The award of the 20-year service contracts for the two southern oilfields could add more than 2.7 million barrels to Iraq's current production of 2.5 million barrels a day.  

Copyright (c) 2009 Dow Jones & Company, Inc.