LONDON -(Dow Jones)- BP PLC (BP.LN) said Tuesday that it and China National Petroleum Corporation (CNPC.YY), announced Tuesday they have signed a technical service contract with Iraq's state-owned South Oil Company (SOC) to expand production from the Rumaila oilfield, near Basra in southern Iraq.
MAIN FACTS:
-The signing follows BP's successful bid for the contract with CNPC in Baghdad in June.
-The consortium led by BP (38%) with partners CNPC (37%) and the Iraq government's representative State Oil Marketing Organisation (SOMO - 25%), has agreed to nearly triple the Rumaila field's output to almost three million barrels of oil a day (b/d), which would make it the world's second largest producing oilfield.
-BP and CNPC plan to invest $15 billion in cash over the 20 year lifetime of the contract with the intention of increasing plateau production to 2.85 million b/d in the second half of the next decade.
-Once production has been raised by 10% from its current level of about 1 million b/d, costs will start to be recovered, and fees of $2 a barrel earned on the incremental oil production.
-The Rumaila Field Operating Organisation (ROO) will manage the rehabilitation and expansion project.
-ROO will be staffed mainly by employees from South Oil Company and will contain a small number of technical experts and managers from BP and CNPC.
-BP and its partners intend to use their reservoir management expertise to boost recovery and increase production from the Rumaila field, focussing initially on waterflood and gas reinjection optimization.
-By London Bureau, Dow Jones Newswires; Contact Ian Walker; +44 (0)20 7842 9296; ian.walker@dowjones.com