Oil Deals Between Iraq and Global Majors ...
Friday, Feb 26, 2010
BAGHDAD, Feb 26 (AFP) - Iraq has signed a raft of deals with foreign oil companies that could take its crude output capacity up to 12 million barrels per day, rivalling top producer Saudi Arabia.
There are still hurdles in the way, not least a March 7 parliamentary election that could usher in a new government inclined to try to renegotiate some of the deals.
At the same time, the lure of billions of dollars in revenues could persuade whoever forms the next Iraqi government to allow the contracts to stand unchallenged.
The following are the signed deals, listed in order of the size of the reservoirs involved, and others still in the works:
Britain's BP Plc (BP.L) and China's CNPC signed the first major post-U.S. invasion oil deal in November for supergiant Rumaila field, with estimated reserves of 17 billion barrels. The two companies aim to boost production to 2.85 million bpd from around 1.066 million bpd currently, and have accepted a remuneration fee of $2 per barrel.
BP said it would invest around $15 billion. BP has a 38 percent stake and its partner CNPC has 37 percent while Iraq holds 25 percent.
* WEST QURNA PHASE TWO
Russian energy giant Lukoil (LKOH.MM) and Norway's Statoil (STL.OL) sealed a deal for the supergiant, 12.9-billion-barrel supergiant oilfield in Iraq's south on Jan. 31. The partners agreed a remuneration fee of $1.15 per barrel and pledged to take production to a plateau of 1.8 million bpd.
Iraq holds a 25 percent stake, Lukoil 56.25 percent and Statoil 18.75 percent. Statoil has said it would invest $1.4 billion over 4-5 years. Lukoil put total investment at more than $30 billion. The firms would start recovering costs when output reaches 120,000 bpd.
The massive 12.6-billion-barrel Majnoon oilfield was taken by Royal Dutch Shell (RDSa.L), Europe's largest oil company, and Malaysia's Petronas [PETR.UL], which inked the final pact on Jan. 17. Shell officials have said the firms would invest "tens of billions" of dollars.
Shell has a 45 percent share, with partner Petronas holding 30 percent and Iraq 25 percent. The firms will receive a remuneration fee of $1.39 per barrel for boosting output to a plateau production target of 1.8 million barrels per day (bpd) from the current output of just under 50,000 bpd. Firms can start recovering costs once output hits 175,000 bpd.
* WEST QURNA PHASE ONE
West Qurna Phase One found no bidders in the first auction, but a subsequent competition behind closed doors led to a deal with Exxon Mobil (XOM.N) and Shell. The companies inked the final pact on Jan. 25.
The field has reserves of 8.7 billion barrels. The consortium aims to boost output to 2.325 million bpd from 279,000 bpd, and accepted a fee of $1.90 per barrel. Exxon has a 60 percent interest in the consortium, with Iraq holding 25 percent and Shell the remainder.
China National Petroleum Company (CNPC), France's Total (TOTF.PA) and Petronas clinched the final contract for Halfaya on Jan. 27, with a fee of $1.40 per barrel and a plateau production target of 535,000 bpd from a current 3,100 bpd.
Total holds a 18.75 percent interest in the consortium, and CNPC with 37.5 percent, Petronas 18.75 percent and Iraq 25 percent. Halfaya, situated in southern Iraq, has estimated reserves of 4.1 billion barrels of oil. The firms would start recovering costs when output hits 70,000 bpd.
Italy's Eni (ENI.MI) sealed the final contract with Iraq on Jan. 22 for the 4-billion-barrel Zubair oilfield. Eni and partners, U.S.-based Occidental Petroleum Corp (OXY.N) and KOGAS, set an output target of 1.2 million bpd from around 200,000 bpd currently.
The consortium planned to invest over $20 billion and accepted a remuneration fee of $2 a barrel. Eni has a 32.81 percent stake, Oxy 23.44 percent, KOGAS 18.75 percent and Iraq's Missan Oil Company 25 percent.
The Chinese National Petroleum Company (CNPC) started work last March on the al-Ahdab oilfield in southeastern Wasit province after successfully renegotiating an old development deal that dated back to Saddam Hussein's government.
CNPC hopes to pump 110,000-130,000 bpd from the field, which has estimated reserves of 1 billion barrels.
A smaller oilfield with 900 million in reserves, Gharaf was won by Petronas and the Japan Petroleum Exploration Co (Japex) (1662.T) in a fierce competition in the second round, and the deal was signed on Jan. 18. Petronas will hold 45 percent, Japex 40 percent and Iraq 25 percent, and will receive a fee of $1.49 per barrel. Gharaf has a production target of 230,000 bpd.
The consortium expects to invest $7-$8 billion. The firms can start recovering costs once output reaches 35,000 bpd.
* QAYARA AND NAJMAH
Situated in violent Nineveh province, where Sunni insurgents like al Qaeda remain active, the oilfields south of the provincial capital Mosul were won by Angolan state oil firm Sonangol. Qayara has reserves of some 800 million barrels and Najmah 900 million.
Sonangol signed the final deal on Jan. 26 and holds a 75 percent stake in the venture to exploit the fields. It would receive a $6 a barrel remuneration fee with a plateau production target of 110,000 bpd for Najmah, and a fee of $5 a barrel and output target of 120,000 bpd for Qayara.
The firm has said it will invest $2 billion in Qayara. Sonangol could start recovering costs once Qaraya hits 30,000 bpd and once Najmah pumps 20,000 bpd.
Gazprom Neft (SIBN.MM), the oil arm of Russia's Gazprom (GAZP.MM), inked the deal for the Badrah field on Jan. 28 with partners Turkey's TPAO, South Korea's KOGAS (036460.KS) and Petronas. The consortium planned to invest $3.52 billion.
The field is near Iraq's border with Iran and has a 100-million-barrel reservoir. The firms accepted a remuneration fee of $5.50 per barrel and set a plateau production target of 170,000 bpd. Gazprom Neft holds 30 percent, Kogas 22.5 percent, Petronas 15 percent, TPAO 7.5 percent and Iraq 25 percent.
The firms would start recovering costs once they pump 15,000 bpd from the field.
DEALS THAT MAY YET EMERGE
Iraq is seeking a revised bid from a Shell-led group for Kirkuk, which is currently producing 350,000 bpd. Iraq had offered the field in its first auction of oilfield contracts in 2009 but received no acceptable bids.
In its initial failed bid, Shell envisioned a plateau production of 825,000 bpd. One of Iraq's older oilfields, it has estimated reserves of 8.5 billion barrels and is expected to encounter declining production rates faster than others.
Iraq aims to sign an engineering, procurement and construction deal for Nassiriya with a group led by Japan's Nippon Oil Corp. The largely undeveloped field is listed as having reserves under 5 billion barrels. Nippon has projected pumping up to 200,000 bpd in two years, according to Iraqi officials.
Iraq said on Jan. 27 that talks for the field would continue. Nippon (5001.T) and partners, oil explorer Inpex Corp (1605.T) and plant engineering firm JGC Corp (1963.T), have been negotiating the deal for many months.
Iraq's Oil Ministry is negotiating with China's CNOOC (0883.HK) and Sinochem (600500.SS) for a service contract for the 2.5 billion barrel, three-oilfield Maysan complex.
The fields were offered in the first auction of oilfield contracts but not awarded. According to Iraqi officials, CNOOC decided to accept the proposed remuneration fee of $2.30 for every additional barrel of oil produced, compared with more than $20 per barrel it and Sinochem had originally sought.
CNOOC and Sinochem projected plateau output of 450,000 bpd.