BP, CNPC signs deal to hike Rumaila output

By OGJ editors
-- BP PLC and China National Petroleum Corp. have signed the technical service contract with the Iraqi government that will enable them to nearly triple oil production in supergiant Rumaila field to 2.85 million b/d.

The contract is with Iraq’s South Oil Co. BP and CNPC bid for the work in a June auction of agreements covering eight Iraqi fields (OGJ, Oct. 19, 2009, p. 31).

BP and CNPC plan to invest $15 billion in cash over 20 years and expect to reach plateau production in the second half of the next decade.

The companies can begin recovering costs and earning fees of $2/bbl when production reaches 10% above its current level of about 1 million b/d.

BP said it and CNPC will concentrate initially on waterflooding and gas injection. BP discovered the field, reserves of which are estimated at 17.8 billion bbl, in 1953. The company assisted in a study of the field commissioned by the Ministry of Oil in 2005 (OGJ, Jan. 24, 2005, Newsletter).

Rumaila field is in Iraq’s southern producing area between Basra and Kut (see map, OGJ, Jan. 19, 2009, p. 47).

Rumaila Field Operating Organization will manage the project, staffed mainly by employees of South Oil Co.

BP holds a 38% interest in the project venture, CNPC 37%, and the Iraqi government through State Oil Marketing Organization 25%.

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