Iraq is finally coming to terms with the possibility of lowering its grand crude oil production ambitions, but the negotiations with international oil companies are taking time, with a knock-on effect on the award of contracts for production facilities.
The Oil Ministry has been in talks with several oil companies, which signed on for a raft of field development deals in 2010, to reduce their production targets. A decision on production levels is not expected until 2015, but the Oil Ministry has already begun the process of scaling back the countrys inflated target plateau production rate of more than 12 million barrels a day (b/d) by 2030, down to 9 million b/d.
Italys Eni is developing the 4-billion barrel Zubair oil field and was understood to be in the final stages of negotiations in January to slash its production target by almost a third to 850,000 b/d, from the original 1.25 million b/d. Six months on, there has been no announcement of a new contract. Other firms are also still stuck in limbo.
At least five firms submitted bids more than a year ago for the development of a major oil processing plant at the field, but they have since been asked to submit a new set of prices based on reduced capacity. These were submitted in May, but have not been opened.
The uncertainty is weighing on international engineering, procurement and construction (EPC) firms, which view Iraq as possibly the fastest growing market in the region. The country still undoubtedly represents one of the biggest opportunities for contractors, but until the Oil Ministry makes a decision in 2015, this ambiguity will continue to surround Iraqs major upstream oil and gas projects.