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MEOG PROJECTS & COMPANIES MEOG

BP in talks regarding

Rumaila target: report

IRAQ BP is reported to be in discussions with Iraq’s project), while restricted access to the field and
Ministry of Oil (MoO) regarding plans to global travel due to COVID-19 have impacted
increase production to an agreed plateau of the movement of people and materials.”
2.1mn barrels per day from the current level of Rumaila managed to produce around 25%
1.4mn bpd. of its oil in place before water injection was
Speaking to S&P Global Platts, BP’s Country required.
Head, Zaid Elyaseri said: “There is an ongoing Its Qarmat Ali water treatment plant provides
discussion with the ministry of oil and Basra Oil around 500,000 bpd of water and the capacity
Co. [BOC] on how to proceed, given the low could be doubled to avoid reliance on the CSSP.
oil price environment and the reduction in the With water-flooding planned to boost output
activity set that the ministry has requested all though, estimates have suggested that the field’s
IOCs to do this year as a result of low oil prices.” water requirements could reach 8mn bpd.
He said that discussions are focusing on “tim- Iraqi Oil Minister Ihsan Abdul Jabbar said in
ing and all other details”, adding: “We are work- July that Baghdad was considering amending
ing to increase production gradually.” contracts at high cost fields as it seeks to control
BP operates the field and is partnered by expenditure amid production cuts. He noted
BOC, PetroChina and Iraq’s State Oil Marketing that the Federal Government is keen to cut costs
Organization (SOMO) on a Long-Term Service at fields producing heavy, sour crude grades to
Contract (LTSC) which expires in 2034. The prioritise investments in lower-cost assets with
super-major took operatorship of the asset in lighter, more valuable output.
2009 following Iraq’s first licensing round and Iraq has struggled to pay IOCs for their work
the original plateau target envisaged production to develop oilfields, with their fees fixed and oil
of 2.85mn bpd with a maximum remuneration prices having fluctuated wildly in recent years.
fee of $2 per barrel. Average per barrel extraction fees in southern
Earlier this year, Baghdad called on IOCs to Iraq, which is home to the majority of the coun-
cut capital expenditures and reduce output cer- try’s most productive assets, are $1-2 per barrel
tain southern fields by 350,000 bpd, while BOC, excluding capex and $4-6 per barrel including
which is responsible for the southern region, capex. This puts the region on a par with Saudi
was expected to reduce output by 300,000 bpd Arabia, and among the cheapest in the world.
in order to help Iraq comply with OPEC+ reduc- Meanwhile, the average remuneration fee
tion targets. per barrel of non-heavy oil produced over an
Elyaseri told Platts: “Rumaila Operating initial threshold level, is less than $6 per barrel.
Organization (ROO) and BP have responded to The LTSCs awarded to IOCs during the first two
the ministry’s request to reduce capex by 30%, bidding rounds feature per barrel fees ranging
coupled obviously with the OPEC cuts and the from $1.15 (LUKoil at West Qurna 2) to $5.50
low oil price and this impacts activity sets.” (GazpromNeft at Badra).
He added that “aside from the reduction in However, Elyaseri told Platts that he was not
capex, some activities have been postponed “aware of any discussions taking place around
(for example the produced water re-injection the terms of the technical service contract”.™

P10 www. NEWSBASE .com Week 45 11•November•2020