Details emerge on Iraq oil deal with China

03 September 2008
Fresh details have emerged of the service deal signed with China for the development of the Al-Ahdab oil field, giving an indication to other oil majors about the type of contracts on offer in the country in the continued absence of an oil law.

London-based consultant Global Insight says China National Petroleum Corporation (CNPC) will develop the field and manage production for a 20-year period at an initial price of $6-a-barrel, which will fall to $3-a-barrel as investments are recouped.

Around 25,000-barrels-a-day (b/d) is expected to be produced in the first three years, rising to 110,000 b/d in the future.

Global Insight notes that although CNPC is not allowed to market the crude itself, the relationship will place it in a good position to guarantee a flow of oil from Iraq to China.

Iraq originally signed a $700m deal with China National Petroleum Corporation (CNPC) in 1997 to develop the field, but it was delayed and then suspended following UN sanctions (MEED 11:8:08).

An oil ministry spokesman confirmed to MEED on 2 September that Iraq’s cabinet approved the contract between North Oil Company and CNPC.

The Chinese firm has agreed to invest $3bn in exchange for a 75 per cent stake in the venture with Iraq's North Oil Company holding the remainder. Final approval is still pending from China’s government.

A MEED Subscription...

Subscribe or upgrade your current 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