Iraq’s ongoing budget crisis has delayed the $2.5bn Rumaila oilfield development project, according to Zaid Elyaseri, the Iraq country manager for the UK-based energy company BP.

Contract awards worth $1.37bn are currently on hold as BP waits for approval from Iraq’s central government, according to Elyaseri, who spoke to MEED on the sidelines of the Basra Oil and Gas Infrastructure conference in Istanbul.

“The timeframe for the project is uncertain,” he said. “We are waiting to hear from Baghdad.”

The first project that needs to be approved by Baghdad is a $865m package to three central processing facilities (CPFs), a gas processing plant and associated facilities.

The second is a $500m package for four cluster pump stations.

Commercial bids for both packages were submitted in the fourth quarter of 2014 and it was expected that contracts would be awarded during 2015, but this is now unlikely.

Other parts of the project are also being impacted by the budget uncertainty, according to Elyaseri.

Speaking to MEED he said that civil works have started on the Rumaila oilfield development project’s $450m early power plant package, but the construction schedule remains uncertain.

In May 2015 BP agreed with Baghdad to cut spending on the Rumaila project by $1bn after the government warned the collapse in oil prices and the war with the Islamic State of Iraq and Syria (Isis) was making it difficult to pay oil companies.

The agreement saw the budget cut from $3.5bn to $2.5bn and there could be more cuts in the pipeline.

On 6 September, a letter from the Oil Ministry warned foreign companies developing the country’s southern oil fields that Baghdad had “sharply reduced the funds available to the ministry” due to the drop in government revenues from crude sales.

The Rumaila project is owned by a partnership between BP, China National Petroleum Corporation (CNPC), and Iraq’s state-owned South Oil Company (SOC).

The field has estimated reserves of 15.5 billion barrels and was producing 1.4 million barrels a day in May this year.

The schedule for the $4bn West Qurna-2 field development project is also currently uncertain due to Baghdad’s budget problems.

On 27 October MEED reported that the project’s future was being discussed by Iraqi government officials and Lukoil, the Russian company operating the field.