Iraq is considering a multi-billion-dollar deal with U.K. oil
major BP PLC (BP) to double the output from the country's giant
Kirkuk oil field in northern Iraq, a senior Iraqi oil official said
Thursday.
Abdul Mahdy al-Ameedi, head of the oil ministry's petroleum
contracts and licensing directorate, said a request has been sent
to the cabinet to approve contract negotiations with BP on
developing the Kirkuk oil field, which is suffering from massive
output declines.
"We have sent a request to the council of ministers to approve
negotiations with BP to redevelop Kirkuk," Mr. Ameedi told Dow
Jones Newswires.
Production at Kirkuk, discovered in 1927, has declined to
260,000 barrels a day from 900,000 barrels a day in the early 2000s
after years of injecting water and dumping unwanted crude and other
oil products in the field.
"We want to bring output from the field to 600,000 barrels a
day," an Iraqi oil industry source said. He said production from
the field is declining on daily basis.
BP wasn't immediately available to comment.
In addition to BP, two giant oil services companies,
Schlumberger Ltd. (SLB) and Baker Hughes Inc. (BHI), have also held
talks with the oil ministry on upgrading Kirkuk.
BP is already working in southern Iraq. It is developing the
1.35 million barrels a day Rumaila oil field, Iraq's largest. BP
was awarded the Rumaila field during the first post-war bidding
round in 2009.
Mr. Ameedi said that BP's contract in southern Iraq could
involve the Kirkuk deal, with amendments. "Seventy% provisions of
the (possible) contract with BP to develop Kirkuk are ready," he
said without giving further details.
Kirkuk was one of the fields auctioned by Baghdad in the
country's first post-war oil licensing round held in 2009. A
consortium led by Royal Dutch Shell PLC (RDSA) offered to boost
output from the field to 825,000 barrels a day for a fee of $7.89 a
barrel, but Baghdad insisted on a payment of $2 a barrel.
Most of the companies at the 2009 auction didn't submit bids for
the Kirkuk field as the situation in the province has been unstable
since the U.S.-led war against Iraq in 2003. Kirkuk is disputed by
the Kurds and the central government in Baghdad. The Kurds say
Kirkuk is part of Kurdistan and should be annexed, while Baghdad
wants Kirkuk to remain under its control.
Write to Hassan Hafidh at hassan.hafidh@dowjones.com
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