Cnooc to Sign Iraq Missan Oil Field Deal

Source: The Wall Street Journal 5/13/2010, Location: Middle East

A consortium led by Cnooc Ltd. (CEO), the Hong-Kong-listed unit of China National Offshore Oil Corp., will sign a final deal with Iraq to develop the 2.5 billion-barrel Missan oil field complex in southern Iraq, a senior Iraqi Oil Ministry official said.

Sabah Abdul Kadhem al-Saadi, director of the legal and commercial office at the Oil Ministry's Petroleum Contracts and Licensing Directorate, told Dow Jones Newswires the deal would be clinched following approval by the Iraqi cabinet.

Cnooc and its partner, Sinochem International Corp. (600500.SH), in March agreed to the Iraqi oil ministry's proposals to develop the three Missan fields--Fakka, Buzurgan and Abu Ghirab and they signed an initial pact with the oil ministry in that month.

It isn't known, however, if Sinochem is still interested in the deal. Saadi said that Sinochem had asked to rejoin the consortium after it decided a few weeks ago to leave it.

"The ministry has accepted their request to return to the consortium but if they don't show up on Monday, they won't be allowed to participate any more," he said.

Cnooc set a production plateau target for the oil fields at 450,000 barrels a day to be reached in six years and accepted the ministry's remuneration fee of $2.30 a barrel.

The fields are currently producing around 100,000 barrels a day, Saadi said.

The Cnooc/Sinochem alliance made an unsuccessful bid for the complex in the country's first licensing auction in June. The two Chinese state-run firms initially offered a remuneration fee of $21.40 for each extra barrel of oil produced and suggested raising production from the fields to 450,000 barrels a day. They subsequently lowered the fee to $18.09 a barrel, but that was still much higher than Baghdad's proposed fee of $2.30 a barrel.


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