BP and CNPC sign technical services deal to develop Iraq’s Rumaila oil field
BP PLC (LSE: BP) and China National Petroleum Corporation (CNPC),
announced today that they have signed a technical service contract with
Iraq's state-owned South Oil Co (SOC) to expand production from the
Rumaila oil field near Basra.
The signing follows BP's successful bid for the contract with CNPC in Baghdad in June.
The
consortium, led by BP with 38 percent, with partners CNPC, 37 percent,
and the Iraq government's representative State Oil Marketing
Organisation, holding 25 percent, has agreed to nearly triple the
Rumaila field's output to almost 3 million barrels of oil a day, which
would make it the world's second largest producing oilfield.
BP and
CNPC plan to invest approximately US$15 billion in cash over the 20
year lifetime of the contract with the intention
of increasing plateau production to 2.85 million bpd 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 bpd, costs will start to
be recovered, and fees of US$2 a barrel earned on
the incremental oil production.
The Rumaila Field Operating
Organisation (ROO) will manage the rehabilitation and expansion
project. ROO will be staffed mainly by employees from SOC 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.
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