Baghdad, October 29: Iraq is to initial this weekend a draft agreement with a consortium led by Italian energy giant ENI to exploit the Zubair oilfield in southern Iraq, the oil ministry said on Thursday.
“The oil ministry will sign the preliminary agreement with ENI in Baghdad on Sunday,” spokesman Assem Jihad said, adding that the deal would then be submitted to the cabinet for final approval ahead of a formal signing.
He said a separate deal with Britain’s BP and China’s CNPC International to almost triple production at the south’s giant Rumaila field, which already has the approval of ministers, would be signed next Tuesday.
The Italian-led consortium, which also includes China’s Sinopec, Occidental Petroleum Corp of the United States and Korea Gas Corp of South Korea, reached agreement on terms earlier this month.
It agreed to Baghdad’s offer of two dollars for each extra barrel of oil it extracts on top of current production at Zubair.
The field produces around 227,000 barrels per day, according to oil ministry figures released earlier this year, and has reserves of around four billion barrels.
Oil Minister Hussein al-Shahristani has said he wants production at Zubair to increase by 1.125 million bpd within six years.
The deal with BP and CNPC International, approved on October 16, is expected to cost between 14 and 20 billion dollars and boost production at Rumaila from the current one million bpd to around 2.8 million bpd over its 20-year duration.
Rumaila is already integral to Iraq’s oil output, contributing almost half of the nation’s current production of around 2.5 million bpd.
BP and CNPC were the only companies with a successful bid when Iraq offered eight contracts at a June auction. They agreed to receive only two dollars a barrel to operate Rumaila, which has known reserves of 17.7 billion barrels.
It is the first big upstream deal between Iraq and foreign oil majors since nationalisation of the country’s oil industry about four decades ago.
Under the terms of the contract, Iraq’s State Oil Marketing Organisation will be allocated Baghdad’s 25 percent stake, while BP will take 38 percent and CNPC the remaining 37 percent.
A second round of bidding for Iraqi oil contracts is due in the first half of December.
—Agencies