BAGHDAD, Nov. 5, 2009
Exxon, Dutch Shell Win Iraq Oil Contract
Third Development Deal in the Last Week between Iraq and a Foreign Oil Corsortium
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(CBS/iStockphoto)
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Fast Facts Iraq Learn about the people, economy and history.
The deal to develop the 8.6 million West Qurna Stage 1 field is the third such agreement in less than a week between a foreign oil consortium and Iraq, which sorely needs foreign company expertise and funding to revive an oil sector hammered by years of neglect, sanctions and, most recently sabotage.
Assem Jihad told The Associated Press the West Qurna deal will be initialed later in the day, and would then be forwarded to the Cabinet for approval.
Under the terms of the 20-year contract, the two companies are targeting a more than sevenfold increase in output in seven years - from the current 280,000 barrels per day to 2.1 million barrels per day. The companies will receive $1.9 for every barrel they produce, and the contract could be extended for another five years.
Although Iraq sits on the world's third-largest oil reserve, with at least 115 billion barrels, the country is producing and exporting far below its potential. Daily production has ranged between 2.3 million and 2.4 million barrels per day, with exports at slightly less than 2 million barrels per day.
Foreign companies are seen as key to reviving the sector and ramping up output, with the increase crucial for Iraq as the nation relies on oil exports for 95 percent of its foreign revenues.
The latest deal comes two days after Iraq finalized a deal with British oil giant BP PLC and China's CNPC to develop its biggest oil field, the 17.8 billion barrels Rumaila in the south.
BP and CNPC - who were the only winners in a much-touted, but ultimately disappointing oil licensing auction in June - will be paid $2 per barrel produced to raise production from the current 1 million barrels a day to 2.85 million barrels a day.
On Monday, a consortium led by Italy's Eni SpA signed an initial agreement to develop the 4.1 billion barrel Zubair oil field, which lies near West Quran and Rumaila.
Eni and its partners, the U.S.'s Occidental Petroleum Corp. and South Korea's KOGAS, aim to boost output to 1.1 million barrels per day within seven years, up from the current 200,000 barrels per day.
According to Iraqi Oil Minister Hussain al-Shahristani, the combined project output from Rumaila, West Qurna Stage I and Zubair will exceed 6 million barrels a day in six to seven years, with the companies expected to invest a total of about $100 billion in the projects.
Two other consortiums were bidding for the West Qurna Stage 1 project - one headed by Russia's Lukoil and U.S. giant ConocoPhillips and the other was headed by China's CNPC.
The field was among five oil and two gas fields left over from the June bidding round, Iraq's first such oil auction in more than 30 years.
Iraq is planning a second bidding round on Dec. 11-12. Forty-five international oil companies will compete for development right for 10 oil projects.
© MMIX The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
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- Are there no public companies who can do this-with the private banks going under& having to get public funds& the "contractors" losing two wars to some camel jocks & goat herders-the private sector can't do anything right...
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- Yes, now the Big Oil Co's get the money, but 20 yrs down the road Iraq will be another Saudia Arabia: oo much money and can't buy enough American land, technology, or businesses fast enough.
Our soldiers blood will be paying for the purchase of our lands, as well as our technology and businesses.
What is wrong with us (USA)???? - Reply to this comment
- Goldman Sachs, the oil cos, and BHO Admin....replacing JPChase, the oil companies and W(and his father - same sludge different shovel.
this is NOT 'free market" capitalism - this is global STATE capitalism....qovernment(s) and global interests...in an unholy AND SOCIALIST symbiotic relationship that redistrutes American taxdollars and American paychecks to the puppet masters..the ones in DC AND!!! NYC...
Inverventionism...the cry of tyrants and megalomaniacas...
it is also bipartisan - Reply to this comment
- Kind of puts a dent in the Libs claim that all Iraq's oil contracts are for his "buddies"
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- Yes, the war which Bush and Cheney fought is finally paying off...for them and their cronies in big oil. Got to hand it to them, they got away with it!!! Drill baby drill!!! Lie baby lie!! Kill baby kill!!
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- America does not need another OPEC oil field. The Iraqi oil field is slight when compared to Venezuela. Other South America nations swim in petroleum. Brazil, Colombia, and Ecuador have deep and rich off shore deposits. Why fight a worthless war for tyrannical Saudis?
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- See? ALl those American lives were not wasted, some rich Americans will make even more money off the war thanks to Bush and his Republican friends.
Who said the Iraq war was a mistake?
Now time to jack up gas prices to pay for the exploration.
Think oil prices will drop now?
Think again.
"Let them drill, Let them drill"
LOL - Reply to this comment
- Millions have died, and counting, just so the big oil companies could get their hands on the money it will bring, and for what our troops died for. I am sure the Bush /Chaney Gang are happy now.
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