Oil majors negotiate reduced Iraq production targets
BY HASSAN HAFIDH
BAGHDAD -- Lukoil Holdings and Eni have become the first companies to cut their production targets this year.
"We are in talks with BP to reduce the plateau target for Rumaila field from 2.850 MMbpd to 2.1 MMbpd," said Abdul Mehdy al-Ameedi, head of the Iraqi Oil Ministry's petroleum contracts and licensing directorate, said at the sidelines of an Iraqi oil meeting in Amman. BP and partner China National Petroleum Corp., are producing some 1.4 MMbpd from the field now.
Shell and partner, Petronas, are negotiating with Iraq to reduce its oil production target at Majnoon field by 600,000 bpd to 1.2 MMbpd instead of the previously agreed plateau of 1.8 MMbpd, Mr. Ameedi said. Majnoon is expected to start first production later this month at 175,000 bpd.
The Exxon Mobil-led consortium operating the West Qurna Phase One oil field is also currently in advanced talks with the Iraqi government to reduce its production target from 2.825 MMbpd to 1.8 MMbpd, he said. Exxon is producing around 450,000 bpd from the field now.
Exxon has agreed with PetroChina and Pertamina to sell 25% and 10% of its 60% stake in the project respectively. The United States energy giant has angered Baghdad after it signed a number of deals with the Kurdistan regional government in Erbil. Baghdad and the KRG are at logger head over who should control the oil wealth in the region.
Iraq has reduced its production target by 3 MMbpd to 9 MMbpd by 2017. The original target of 12 MMbpd wasn't only unrealistic but commercially problematic.
We don't have the infrastructure to produce, export and store 12 MMbpd, Mr. Ameedi said. "There are also the market factors, we might not be able to find buyers for that amount of produced crude."
In January this year, Lukoil was the first firm in Iraq to reach an agreement with Baghdad to reduce the production target at West Qurna Phase Two from 1.8 MMbpd to 1.2 MMbpd. Lukoil is expected to start first production from the field at 150,000 bpd later this year or early next year. It's targeting 400,000 bpd next year.
The agreement was followed by another in May between Eni and the Iraqi oil ministry to revise the plateau production target at Zubair field from 1.2 MMbpd to 850,000 bpd. Eni and its partner Occidental Petroleum, Korea Gas Corporation, and Missan Oil Co. are producing some 300,000 bpd now.
Dow Jones Newswires