Eni, Iraq agree to cut Zubair output goal
Eni SPA has signed an agreement with Iraqi authorities lowering the production target for supergiant Zubair oil field to 850,000 b/d from the originally agreed 1.2 million b/d.
Under the agreement with South Oil Co. and the Iraqi Ministry of Oil, Eni’s technical service contract also was extended by 5 years until 2035.
The government awarded the contract in 2010 after its first bidding round.
Zubair produced about 183,000 b/d of oil when the contract took effect in February 2010. A 10% production increase later that year triggered cost recovery and allowed the contractors’ group to earn a remuneration fee of $2/bbl (OGJ Online, Dec. 6, 2010).
Infrastructure and supply constraints have combined with security problems to hamper development throughout Iraq and have caused the government to lower its production goal for 2017 from nearly 12 million b/d to about 9.5 million b/d. The lower target would be triple the current level and is still considered by many observers to be unreasonably high. At least some contracts covering other Iraqi fields are reported to be under renegotiation.
Eni, with 32.81% interest in the Zubair contract, leads a group that includes Missan Oil Co., 25%, Occidental Petroleum Corp., 23.44%, and Korea Gas Corp., 18.75%.