BP Gives CNPC Bigger Rumaila Oil Field Stake

Source: The Wall Street Journal 10/2/2009, Location: Middle East

BP PLC is giving its partner China National Petroleum Corp. a larger share of equity in a project to develop Rumaila, Iraq's largest producing oil field, a senior Iraqi oil official said Friday.

The new Rumaila stakes cuts BP's share to 38% from an initial 50%, raises CNPC's share to 37% from 25% and maintains Iraq's portion at 25%, the official told Dow Jones Newswires.

The BP-led group won the project to develop the southern Rumaila field in a bidding round at the end of June. BP's original stake, according to Iraqi officials, was 50% and CNPC's 25%, while Iraq's South Oil Company holds the rest. The official said the two partners agreed on the change in stakes during meetings with Iraq's oil ministry and the South Oil Co. in Baghdad that began Tuesday.

Discussions on finalizing the contract continue and details are confidential until the process is complete," a BP spokesman said. BP believes it will remain operator of the project, he said.

CNPC wasn't immediately available for comment.

BP and CNPC pledged to raise production at Rumaila to 2.85 million barrels a day from the current 1.1 million barrels a day, almost half of Iraq's total output of 2.45 million barrels a day. Rumaila alone holds between 17 billion to 20 billion barrels of oil reserves, more than the proven reserves of some members of the Organization of Petroleum Exporting Countries.

The BP/CNPC alliance is working with the current Rumaila operator, Iraq's state-owned South Oil Co., or SOC, to set up a dedicated operating company, relying heavily on Iraqi manpower with a small team of BP and CNPC technical staff.

They started technical meetings with SOC officials in Basra Thursday to finalize the contract, the official said.


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