Page 4 - MEOG Week 24 2021

MEOG COMMENTARY MEOG

BP considers

Rumaila spin-off

Reports suggest that BP is working on a plan to
spin off its holding in Iraq’s Rumaila oilfield as the

company proceeds with its transition from IOC to IEC.

IRAQ UK-LISTED BP is reported to be looking to spin Changing of the guard
off its Iraqi operations into a standalone entity, It comes as fellow IOC ExxonMobil is trying
according to sources spoken to last week by the to extricate itself from the TSC for the West
WHAT: Wall Street Journal. Qurna-1 oilfield, north of Rumaila, following the
The company is looking The spun-off firm would hold the IOC’s departure from the country’s oil sector of Royal
to spin off its stake in stake in the supergiant Rumaila oilfield, which is Dutch Shell, Occidental Petroleum and Equinor
the Rumaila Operating home to around 17bn barrels of oil, and would be (formerly Statoil).
Organisation which runs jointly owned between BP and China National The retreat from Iraq has been born out of
the 17bn barrel field. Petroleum Corp. (CNPC), the parent of its main numerous factors, but those appearing to be
partner in the asset. common among the IOCs are the unattractive
WHY: BP holds 47.6% in the Rumaila Operating terms of the TSCs and Baghdad’s hesitance to
Rumaila does not fit with Organisation (ROO) and is joined by Pet- renegotiate, a move by the majors to focus on gas
BP’s new strategy and roChina (46.4%), Iraq’s state oil marketer SOMO and cleaner forms of energy and fear of becom-
ring-fencing the asset (6%) and state-owned Basra Oil Co. (BOC) on ing entangled in the corruption that continues to
would allow it to reduce a long-term technical service contract (TSC) plague the country.
its exposure to oil and which expires in 2034. The super-major took In late 2020, BP was reported to be in discus-
gas while still benefiting operatorship of the asset in 2009 following Iraq’s sions with Iraq’s Ministry of Oil (MoO) regard-
from dividends. first licensing round and the original plateau tar- ing plans to raise output to an agreed plateau of
get envisaged production of 2.85mn bpd with a 2.1mn barrels per day from the current level of
WHAT NEXT: maximum remuneration fee of $2 per barrel. 1.4mn bpd.
While BP does not Speaking to the WSJ, the sources said that the Speaking to S&P Global Platts, BP’s country
appear as if it is looking new company would hold its own debt, separate head, Zaid Elyaseri, said: “There is an ongoing
to sell, the news comes from BP, and would be expected to distribute discussion with the ministry of oil and BOC on
as contention heats up profits via dividends. The move would align with how to proceed, given the low oil price environ-
between Baghdad and the company’s strategic pivot towards cleaner ment and the reduction in the activity set that the
the IOCs developing its energies and help it reduce its exposure to oil ministry has requested all IOCs to do this year as
southern fields over the and gas. a result of low oil prices.”
unfavourable terms of
their contracts.

Source: BP

P4 www. NEWSBASE .com Week 24 16•June•2021