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BP angling for Rumaila services work


Wire services

BP hopes to sign within a few months a service contract designed to boost output from Iraq’s southern Rumaila field by 100,000 barrels per day, Steve Peacock, president of BP's Middle East and South Asia exploration and production unit, has said.

The deal is one of five that Iraq is negotiating with foreign oil giants to boost output by 500,000 bpd, or nearly a quarter, from its largest oil fields. Iraqi officials had hoped to sign the deals by early April.

"I'd say we might sign around the middle of the year," Peacock said. "These are active discussions with serious intent, there is no sense that they've stalled or reconsidered, it's just taking longer than anticipated."

Payment terms for the service contracts were yet to be concluded, Peacock said in an interview with Reuters. Iraq has said each contract could be worth up to $500 million.

Iraq wants to sign two-year technical service contracts as part of stopgap measures to boost oil production in the absence of a comprehensive oil law. Legislation to set the terms and extent of foreign investment in the country has been stalled in parliament for more than a year.

The target to boost output by 100,000 bpd from the field was possible, although to do so in two years would require an aggressive development plan, Peacock said.

Oil supermajors including BP have been studying Iraq’s fields for years and have provided training and technical assistance as they look to position themselves for any future contracts.

"We've studied the whole of the rest of the country, so we're waiting for what comes next after the service agreements. And we have an opinion on which bits we'd be more interested in," Peacock said.

BP was in similar discussions in Kuwait for a service contract there, Peacock said.

Kuwait aims to include a performance-related clause in its service contracts that would increase the attraction for signing up for international oil companies.

The contracts would likely be concluded over a period of months rather than years, he added.

In Oman, drilling would start on BP's project to develop tight gas reserves by the end of the fourth quarter, Peacock said.

BP won a contract to develop tight gas reserves in Oman in early 2007.


Tuesday, 08 April, 2008, 06:32 GMT  | last updated: Tuesday, 08 April, 2008, 06:32 GMT

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