Iraq, oil majors agree terms on oilfield project

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Iraq and oil majors British Petroleum and China's CNPC International have agreed commercial terms for a joint venture to almost triple production at the giant Rumaila oilfield, a report said on Saturday.

The signing of the deal for the 20-year venture, set to cost 14-20 billion dollars, is expected to take place within weeks, Middle East Economic Survey (MEES) quoted officials as saying.

"We have more or less finished with the outstanding points. Hopefully, there will be a signing within a couple of weeks," deputy oil minister Abdulkareem al-Leaby told the newsletter after a meeting on Wednesday.

Final ratification of the Technical Service Contract will take a bit longer since the parties need to sort out technical and mechanical details of the contract, MEES quoted a source familiar with talks as saying.

MEES said Iraq state marketer SOMO will be allocated Baghdad's 25 percent stake, while BP has cut its stake from 50 percent to 38 percent and CNPC has consequently boosted its participation from 25 percent to 37 percent.

The joint venture is slated to boost production at the southern Rumaila field from the current one million barrels per day (bpd) to around 2.85 million bpd over the duration of the contract.

The plan envisages adding 10 percent to production within a year and raising the field's output by 300,000-400,000 bpd within three to four years, according to MEES.

Iraq's total current oil production is around 2.5 million bpd.

BP and CNPC were the only companies to win a bid out when Iraq offered eight contracts at a June auction. The companies agreed to receive only two dollars a barrel to operate Rumaila, which has known reserves of 17.7 billion barrels.

It is the first big upstream deal between Iraq and foreign oil majors since nationalisation of oil about four decades ago.

The second round of bidding for Iraqi oil contracts is due in the first half of December, Oil Minister Hussein al-Shahristani said last month.

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