BP and CNPC Win Iraqi Rumaila Field development
BP and China National Petroleum Corp. won a contract for the development of Iraq's Rumaila Field, the first of eight giant Iraqi oil and gas development projects. The eight projects involve six active oil fields, including those in Rumaila and Kirkuk, and two undeveloped gas fields. Iraq is offering contracts to foreign companies for the first time in around 40 years since its energy industry was nationalized.
Besides BP and CNPC, the companies selected to participate in the auction include Exxon Mobil Corp. as well as Japan's Nippon Oil Corp., Japan Petroleum Exploration Co., Inpex Corp. and Mitsubishi Corp. The BP-led group won the contract for Rumaila after improving their offer, an Iraqi ministry spokesman said. The Iraqi government set a requirement that bidders charge no more than $2 a barrel to produce crude from the field after recovering costs, lower than the prices BP and Exxon initially bid.
Rumaila, which now produces 956,000 bopd, is the largest field on offer and the first awarded today. The BP group proposed to boost Rumaila’s output to a plateau of 2.85 million bopd at an average cost of $3.99 a barrel, according to the initial bid presentation.