BP waits for Rumaila deal confirmation

18 October 2009

UK energy giant BP says it is yet to receive confirmation that the Iraqi government has approved a contract to develop the giant Rumaila oil field in the south of the country.

The comment follows press reports on 18 October that the cabinet had approved the award of the 25-year deal to develop the field - the country’s biggest - to a consortium of China National Petroleum Corporation (CNPC) and BP. Cabinet approval is the final hurdle before the contract can be awarded. The deal was approved by the country’s oil ministry on 8 October.

BP says that the deal is yet to be formally completed, however. “We welcome the reports and we expected this but we have not yet received direct confirmation of the deal,” says a BP spokesman. “The contract is yet to be signed.”

The Rumaila oil field was handed to the BP-led consortium on 30 June, the only license to be awarded during the country’s first international bid round for oil and gas fields in almost 40 years. In order to secure the deal, the partners had to accept compensation of $2 for every barrel of oil they produce, half the $3.99 a barrel they had offered.

The oil ministry set its minimum production target for the Rumaila field at 1.75 million b/d, up from about 950,000 b/d currently. BP expects to triple output from the field to 2.85 million b/d within seven years, using the low-cost model of its Chinese joint venture partner.

Italy’s Eni announced on 13 October that it had been awarded a deal to develop Iraq’s giant Zubair oil field along with the US’ Occidental Petroleum Corporation and South Korea’s Korea Gaz Corporation. The field currently produces 190,000 barrels a day (b/d). The consortium partners hope to produce 1.125 million barrels a day by 2016.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications