Iraq Approves Oil Contract with BP, CNPC

(Hassan Hafidh)   Iraq’s council of ministers has approved a deal valued at more than $15 billion with the U.K’s BP PLC and Hong Kong’s CNPC to develop Rumaila, Iraq’s largest producing oil field, a top oil official said Saturday.

“The cabinet unanimously approved the Rumaila contract with BP and CNPC during a special session held late Friday night,” Sabah al-Saadi, head of the legal department at the oil ministry’s Petroleum Contracts and Licensing Directorate said at an oil conference in Istanbul.

Mr. Saadi said both sides were expected to sign the deal “within a few days” at the ministry’s offices in Baghdad.

Toby Odone, a London-based spokesman for BP, said the Iraq government hasn’t officially notified the company about the cabinet’s approval. “If that has happened, it is great,” he said.

Senior officials from Iraq’s oil ministry will brief representatives from 45 international oil companies on Sunday about new oil and gas fields open for auction in December.

Last week, Iraq signed an initial agreement with BP and CNPC to nearly triple output at the Rumaila oil field. The two firms won the project in the country’s first auction for oil-field rights in June. Under the 20-year service contract, BP will hold a 38% stake in the venture, while CNPC will own 37%. Iraq will hold the remaining 25%.

Rumaila, with estimated proven reserves of 17 billion to 20 billion barrels, is producing about 1.1 million barrels a day, almost half of Iraq’s total production. BP and CNPC plan to increase production to 2.85 million barrels a day.

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