Tuesday, January 18, 2011

BP, CNPC Increase Production from Iraq's Rumaila Field

by Eric Watkins, OGJ, Jan 11, 2011
Output at Iraq’s giant Rumaila oil field has increased by more than 10% above the 1.066 million b/d ... [initial production rate -- D.R.] established in December 2009, ...

“This production increase is an important step for Iraq and demonstrates the success of the contracts awarded,” said Iraq’s oil minister Abdul Kareem Luaibi, referring to the contract awarded to the two firms, along with Iraq’s State Oil Marketing Co. (SOMO).

Management of the field’s development has been carried out by the Rumaila Operating Organization (ROO), which was originally staffed by 4,000 employees from Iraq’s state-owned South Oil Co. along with 100 technical experts and managers from BP and CNPC.

BP said that the pace of activity on Rumaila has built steadily over the past year, with 20 new rigs now mobilized in the field. Altogether over the past year, BP said 41 wells have been drilled, 103 workovers completed, and 122 km of flowlines laid. Employment has more than doubled to 10,000 workers.

On signing the TSC in 2009, BP and CNPC said they planned to invest $15 billion in cash over the 20 year lifetime of the contract with the intention of increasing plateau production to 2.85 million b/d ...

“Once production has been raised by 10% from its current level of about 1 million b/d, costs will start to be recovered, and fees of $2/bbl earned on the incremental oil production,” BP said at the time.

“Increasing production at Rumaila, the world’s fourth largest oilfield, has been a massive undertaking,” said BP Chief Executive Bob Dudley this week, adding that “We look forward to working with our partners to make Rumaila the world’s second largest oil field.”

In April 2010, BP let contracts worth about $500 million to three firms for drilling. Schlumberger, in partnership with Iraqi Drilling Co., received a contract for three rigs; Daqing Drilling a contract for three rigs; and Weatherford a contract for one rig (OGJ Online, Apr. 5, 2010).

The Rumaila consortium is comprised of BP, 38%, CNPC 37%, and SOMO, 25%.

(Meeting this production target, and the approval of the Rumaila rehabilitation plan last year, represents the achievement of two significant contractual requirements of the technical services contract--TSC--signed between BP, PetroChina, the SOMO and the South Oil Company in November 2009. The terms of the TSC awarded to foreign companies stipulate that the 10% production increase from each of the fields awarded for further development must come within three years of the contracts coming into effect though several foreign companies involved have said the planned increments are well ahead of schedule.--see e.g., Zubair development, too. View my posts under the category/label "Iraq" -- D.R.)

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