While these talks have been happening since last year, Russia's
OAO Lukoil Holdings (LKOH.RS) and Italy's largest oil producer Eni
SpA (E) have become the first companies to cut their production
targets this year.
"We are in talks with BP to reduce the plateau target for
Rumaila field from 2.850 million barrels a day to 2.1 million
barrels a day," Abdul Mehdy al-Ameedi, head of the Iraqi Oil
Ministry's petroleum contracts and licensing directorate, said at
the sidelines of an Iraqi oil meeting in Amman late Tuesday night.
BP and partner China National Petroleum Corp., or CNPC, are
producing some 1.4 million barrels a day from the field now.
Shell and partner, Malaysia's Petronas, are negotiating with
Iraq to reduce its oil production target at Majnoon field by
600,000 barrels a day to 1.2 million b/d instead of the previously
agreed plateau of 1.8 million b/d, Mr. Ameedi said. Majnoon is
expected to start first production later this month at 175,000
barrels a day.
The Exxon Mobil-led consortium operating the West Qurna Phase
One oil field is also currently in advanced talks with the Iraqi
government to reduce its production target from 2.825 million
barrels a day to 1.8 million barrels a day, he said. Exxon is
producing around 450,000 barrels a day from the field now.
Exxon has agreed with PetroChina and Indonesia's Pertamina to
sell 25% and 10% of its 60% stake in the project respectively. The
U.S. energy giant has angered Baghdad after it signed a number of
deals with the Kurdistan regional government in Erbil. Baghdad and
the KRG are at logger head over who should control the oil wealth
in the region.
Iraq has reduced its production target by 3 million barrels a
day to 9 million barrels a day by 2017. The original target of 12
million barrels a day wasn't only unrealistic but commercially
problematic.
"We don't have the infrastructure to produce, export and store
12 million barrels a day," Mr. Ameedi said. "There [are] also the
market factors...we might not be able to find buyers for that
amount of produced crude."
In January this year, Lukoil was the first firm in Iraq to reach
an agreement with Baghdad to reduce the production target at West
Qurna Phase Two from 1.8 million barrels a day to 1.2 million
barrels a day. Lukoil is expected to start first production from
the field at 150,000 barrels a day later this year or early next
year. It's targeting 400,000 barrels a day next year.
The agreement was followed by another in May between Eni and the
Iraqi oil ministry to revise the plateau production target at
Zubair field from 1.2 million barrels a day to 850,000 barrels a
day. Eni and its partner Occidental Petroleum, Korea Gas
Corporation, or Kogas, and Iraqi state partner Missan Oil Co. are
producing some 300,000 barrels a day now.
Write to Hassan Hafidh at hassan.hafidh@wsj.com
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