BP Awards 3 Drilling Deals for Iraq's Rumaila Field

(Dow Jones), Mar. 30, 2010

UK oil major BP, along with Iraq's state-run South Oil Co., has awarded three deals valued at least $500 million to drill 49 wells as part of the program to develop Iraq's largest producing oil field, Rumaila, a senior Iraqi oil official said Tuesday.

The winning companies are Weatherford International Ltd., Schlumberger Ltd. in partnership with the state-run Iraqi Drilling Co., and China's Daqing Oil Field Co. Ltd., the head of the Iraqi Oil Ministry's petroleum contacts and licensing directorate, Abdul Mahdy al-Ameedi, told Dow Jones Newswires.

Weatherford will drill seven wells while the other two companies will drill 21 wells each, on a turn-key basis, Ameedi said. Seven further wells would be awarded to the company that shows the most progress and most efficient working practices, he said.

BP and China National Petroleum Corp. -- that both signed with Baghdad a 20-year technical service contract in November to develop Rumaila -- are planning to increase production from the field by 160,000 barrels a day by the end of this year or early next year, Ameedi said.

The field, in southern Iraq, is currently producing 1.07 million barrels of oil a day.

The BP-led consortium has pledged to almost triple production at the field to 2.85 million barrels a day. Under the deal, BP holds a 38% stake in the venture, while CNPC has 37% and Iraq's South Oil Co. the remaining 25%. The three contractors will receive a fixed fee of $2 for each additional barrel of oil produced from Rumaila.

The Rumaila deal is one of 10 signed with international oil companies late last year and early this year in a bid to revamp the country's war-hit oil industry and quadruple the country's production of 2.5 million barrels a day.

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