US oil firm in three-way venture in Iraq
By Sinan Salaheddin |
January 23, 2010, Saturday
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Print Edition
Print Edition
Iraq yesterday signed a final agreement with a consortium led by Italy's Eni SpA to develop a promising oil field in the south, another step forward in the nation's efforts to develop its dilapidated oil sector to bring in sorely needed cash for postwar reconstruction.
Under the 20-year deal, Eni and partners -- Los Angeles-based Occidental Petroleum Corp and South Korea's KOGAS -- will develop the 4.1-billion-barrel Zubair field for US$2 per barrel produced above the current production level.
The deal boosts Iraq's drive to bring in Western oil technology and raise output. It also marks the first entry by an American oil company to Iraq since the country nationalized its oil industry in 1970.
The consortium plans to boost production from about 200,000 barrels a day to 1.2?million barrels a day within seven years at the field, which was first offered in June in Iraq's first oil auction in more than 30 years.
Only one deal was struck in June, but three consortiums later accepted Iraq's terms for developing two oil fields in the south, including Zubair field. The Eni-led group initially bid US$4.80 per barrel produced, but agreed to the lower payout offered by Iraq.
The Iraqi Oil Minister Hussain al-Shahristani hailed the signing as an "important day in the history of the Iraqi oil industry" and noted that production at Zubair was not at a "satisfactory level" despite years of efforts in Iraqi hands.
Eni CEO Paolo Scaroni called the event a "historical moment," estimating investment of at least US$20 billion in the field, located in Basra province, about 550 kilometers southeast of Baghdad.
Basra is Iraq's second-largest city.
Scaroni said the consortium would probably have both a private security company and Iraqi forces. He didn't elaborate.
Iraq has pending deals with six consortiums, which include major firms such as Exxon Mobil Corp, Royal Dutch Shell Plc and China's CNPC.
The deals are scheduled to be wrapped up next week.
Under the 20-year deal, Eni and partners -- Los Angeles-based Occidental Petroleum Corp and South Korea's KOGAS -- will develop the 4.1-billion-barrel Zubair field for US$2 per barrel produced above the current production level.
The deal boosts Iraq's drive to bring in Western oil technology and raise output. It also marks the first entry by an American oil company to Iraq since the country nationalized its oil industry in 1970.
The consortium plans to boost production from about 200,000 barrels a day to 1.2?million barrels a day within seven years at the field, which was first offered in June in Iraq's first oil auction in more than 30 years.
Only one deal was struck in June, but three consortiums later accepted Iraq's terms for developing two oil fields in the south, including Zubair field. The Eni-led group initially bid US$4.80 per barrel produced, but agreed to the lower payout offered by Iraq.
The Iraqi Oil Minister Hussain al-Shahristani hailed the signing as an "important day in the history of the Iraqi oil industry" and noted that production at Zubair was not at a "satisfactory level" despite years of efforts in Iraqi hands.
Eni CEO Paolo Scaroni called the event a "historical moment," estimating investment of at least US$20 billion in the field, located in Basra province, about 550 kilometers southeast of Baghdad.
Basra is Iraq's second-largest city.
Scaroni said the consortium would probably have both a private security company and Iraqi forces. He didn't elaborate.
Iraq has pending deals with six consortiums, which include major firms such as Exxon Mobil Corp, Royal Dutch Shell Plc and China's CNPC.
The deals are scheduled to be wrapped up next week.
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