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Exxon, Shell Win Iraq’s West Qurna Oilfield Contract (Update3)
By Robert Tuttle
Nov. 5 (Bloomberg) -- Iraq awarded a contract to develop the West Qurna oilfield to Exxon Mobil Corp. and Royal Dutch Shell Plc, a month before the country holds its second licensing round for oilfield contracts since the 2003 U.S. invasion.
The initial agreement, scheduled to be signed today, will be submitted to the Iraqi government for approval as early as next week, Asim Jihad, an Oil Ministry spokesman, said by telephone. The companies will be paid a fee of $1.90 a barrel for the oil they produce, he said, the maximum set by the government in a June licensing round. Exxon spokesman Patrick McGinn confirmed the agreement in an e-mailed statement today.
Earlier this week Iraq signed a contract with BP Plc and China National Petroleum Corp. to triple output at the Rumaila field to 2.85 million barrels a day. An Eni SpA-led group said in October it was awarded a license to develop the Zubair field.
“With these very encouraging examples, there will be a lot of interest in the second licensing round” in December, Samuel Ciszuk, an analyst at IHS Global Insight, said in a telephone interview.
Iraq, holder of the world’s third-largest oil reserves, aims to increase crude production to 6 million barrels a day by 2015. The country produced 2.45 million barrels a day last month, according to Bloomberg estimates.
In addition to Exxon and Shell, Iraq was in discussions with Russia’s OAO Lukoil, Total SA of France and CNPC for West Qurna, Abdul Mahdy al-Ameedi, deputy director general of Iraq’s Petroleum Contracts and Licensing Directorate, said last month.
“It will be a big loss for Lukoil,” which did work on West Qurna when Saddam Hussein ruled Iraq, Ciszuck said. “They have really been eyeing this field.”
Iraq oil deal puts pressure on Opec
By Carola Hoyos in London
Published: November 5 2009 19:34 | Last updated: November 5 2009 19:34
ExxonMobil and Royal Dutch Shell, the two biggest western oil companies, on Thursday won the right to develop Iraq’s giant West Qurna oilfield, raising the prospect of a big jump in Iraqi oil supplies.
Hussein Shahristani, Iraq’s oil minister, has said he is now confident that within seven to 10 years his country will be able to boost its production of little more than 2m barrels a day to almost 10m b/d, more than 10 per cent of today’s total global oil production. In the past, analysts doubted the target was achievable, mainly because of Iraq’s difficult security and political climate. But even they agree now that the big increase is feasible.
A recent note by PFC Energy, the industry consultants, points out that the extra oil which foreign energy companies such as Exxon, BP and Eni have promised to tease out of other Iraqi oilfields adds up to about 4.7m b/d, while the fields that are likely to go under the hammer at Iraq’s next oil auction will add at least another 3m b/d.
Plantagenet wrote:The oil industry in Iraq has never been modernized and little or no modern scientific work has been done utilizing modern geophysical and geological methods for oil exploration. There probably is a great deal of potential there for very significant production increases and perhaps even for the discovery of some major new oil fields.
pstarr wrote:wiki: "30 bn barrels of oil in place" How much of that is recoverable? 70%?, or good for 9 months world consumption
mos6507 wrote:Their natural resources aren't worth anything until they are sold off to the highest bidder. Any other growth industries in Iraq besides roadside bombs and undertakers?
Are they suggesting Manjoon has 30 bbo URR? That's odd, since the EIA says 12.6 bbo.
vampyregirl wrote:The Iraqui Ministry of Oil has awarded Shell and Petronas Carigali a contract for technical assistance in developing the Majnoon field.
Shell is operator of the Development and Service Contract with a 45% share. The Iraqui Ministry of Oil holds a 25% share and Petronas 30%.
The goal is to raise production to 1.8 million bpd, up from the current level of 45k bpd.
Shell looks forward to developing this resource base along with its partners.
A couple of years ago, Iraqi oil production was declining and it didn't seem too likely the country would stabilize any time soon to allow that to change. However, the post-surge stabilization of Iraq has now allowed Iraqi oil production to start creeping up, and in 2009 the Iraqi oil ministry has announced large numbers of contracts with major oil companies to bring production up from the current 2.5mbd or so to 12 mbd over the course of the next 6-7 years. It is also announcing a series of projects to increase the physical export capacity of the country in line with these oil production projects.
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