BP, and China National Petroleum Corporation (CNPC), announced today that they have signed a technical service contract with Iraq's state-owned South Oil Company (SOC) to expand production from the Rumaila oilfield, near Basra in southern Iraq
The signing follows BP's successful bid for the contract with CNPC in Baghdad in June.
The consortium led by BP (38 per cent) with partners CNPC (37 per cent) and the Iraq government's representative State Oil Marketing Organisation (SOMO - 25 per cent), has agreed to nearly triple the Rumaila field's output to almost 3 million barrels of oil a day (b/d), which would make it the world's second largest producing oilfield.
BP and CNPC plan to invest approximately $15 billion in cash over the 20 year lifetime of the contract with the intention of increasing plateau production to 2.85 million b/d in the second half of the next decade. Once production has been raised by 10 per cent from its current level of about 1 million b/d, costs will start to be recovered, and fees of $2 a barrel earned on the incremental oil production.
"We are pleased to have this opportunity to work with the people of Iraq to develop one of the world's great oilfields and we see this as the beginning of a long-term relationship with Iraq," said BP's chief executive Tony Hayward.
"We are also pleased to have the opportunity to help Iraq rebuild its economy after years of war and sanctions. The investment in Rumaila will support Iraq in achieving its ambition of becoming a major player in global oil markets once again and will catalyze training and development opportunities for the many thousands of Iraqi workers on Rumaila," Hayward added.
The Rumaila Field Operating Organisation (ROO) will manage the rehabilitation and expansion project. ROO will be staffed mainly by employees from South Oil Company and will contain a small number of technical experts and managers from BP and CNPC.
BP has already gained information about the Rumaila field through a three year memorandum of understanding to provide technical assistance from 2005 and historically has knowledge of the field's geology dating back to discovery in 1953.
BP and its partners intend to use their reservoir management expertise to boost recovery and increase production from the Rumaila field, focussing initially on waterflood and gas reinjection optimization.
Recommended Reading
Kissler: OPEC+ Likely to Buoy Crude Prices—At Least Somewhat
2024-03-18 - By keeping its voluntary production cuts, OPEC+ is sending a clear signal that oil prices need to be sustainable for both producers and consumers.
JMR Services, A-Plus P&A to Merge Companies
2024-03-05 - The combined organization will operate under JMR Services and aims to become the largest pure-play plug and abandonment company in the nation.
New Fortress Energy Sells Two Power Plants to Puerto Rico
2024-03-18 - New Fortress Energy sold two power plants to the Puerto Rico Electric Power Authority to provide cleaner and lower cost energy to the island.
SilverBow Rejects Kimmeridge’s Latest Offer, ‘Sets the Record Straight’
2024-03-28 - In a letter to SilverBow shareholders, the E&P said Kimmeridge’s offer “substantially undervalues SilverBow” and that Kimmeridge’s own South Texas gas asset values are “overstated.”
Enerplus Increases Quarterly Cash Dividend
2024-02-23 - Enerplus Corp. increased its dividend 8% to US$0.065 (CA$0.088) per share.