Iraq, Lukoil to cut West Qurna-2 output target by 33%
BY HASSAN HAFIDH
MOSCOW -- The Iraqi oil ministry and Lukoil signed an amended contract to cut the production target from Iraq's West Qurna-2 oil to 1.2 MMbopd instead of the previously agreed 1.8 MMbopd. Lukoil would operate the field for 25 years instead of the 20 years projected earlier; the revision also prolongs the production plateau period to 19.5 years from the 13 years agreed upon earlier. But the amended contract hasn't changed the time limit for reaching the production plateau rate of 1.2 MMbopd by the end of 2017.
Abdul Mahdy Al-Ameedi said the reasons that have led Iraq to reduce output from West Qurna-2 and other Iraqi fields include, among others, poor infrastructure, a predicted slump in world oil demand, high costs of building production facilities and potentially lower oil prices due to high production. The oil ministry is also planning to reduce production plateau rates from other southern oil fields, such as Majnoon, Rumaila, West Qurna-1 and Zubair, which are operated by Shell, BP, Exxon Mobil and Eni, respectively, by amending contracts in a month or two, he said.
First production of 150,000 bopd from West Qurna-2 is expected in November this year, according to Lukoil officials, and is expected to increase to 500,000 bopd in 2014. The company has increased its stake in the West Qurna-2 project in Iraq to 75%, following last year's withdrawal of Statoil, which used to own 18.75% in the project whereas North Oil Co. owns 25%. This has been fixed in the amended contract, Mr. Ameedi said.
Dow Jones Newswires