BAGHDAD, Oct 3, (Agencies): China National Petroleum Corp (CNPC) has increased its stake in a project to develop Iraq’s super-giant Rumaila oilfield, while Britain’s BP has lowered its share, an Iraqi oil official said on Saturday. BP and CNPC were the only oil majors to secure a deal in Iraq’s first bidding round for oilfield service contracts, after other companies at the Oil Ministry’s June auction baulked at what they said were stiff contract terms. The senior official, who declined to be named, said CNPC’s stake was now 37 percent, up from an original 25 percent, and that BP’s had fallen to 38 percent, down from 50 percent. Iraq’s State Oil Marketing Organisation will continue to hold 25 percent, he said. BP and CNPC officials met Iraqi officials in Basra in late September as part of steps to finalise the Rumaila deal, the Iraqi oil official said, giving no timeline for completion. “A delegation comprising of financial and administrative officials from BP and CNPC concluded a three days of meetings with South Oil Company (SOC) officials to discuss Rumaila operating and investment expenses,” the Iraqi oil official said.
Iraq’s SOC oversees exports and production from the southern oil hub of Basra and surrounding areas. Talks included negotiations over the number of employees in a joint operating team of BP, CNPC and Iraqi workers. Rumaila is the workhorse of Iraq’s oil industry with a current capacity of 1.1 million barrels per day, almost half Iraq’s total output of 2.4 million bpd.
Target
To secure the Rumaila contract, BP and CNPC cut their remuneration bids to $2 per barrel from their initial target of nearly $4 a barrel.
China has been aggressively seeking crude to feed its booming economy, tapping sources in regions seen as risky or unprofitable by others.
The signing of the deal for the 20-year venture, expected to cost $14-$20 billion, is expected to take place within weeks, Middle East Economic Survey (MEES) quoted officials as saying.
“We have more or less finished with the outstanding points. Hopefully, there will be a signing within a couple of weeks,” deputy oil minister Abdulkareem al-Leaby told the newsletter after a meeting on Wednesday.
Final ratification of the Technical Service Contract will take a bit longer since the parties need to sort out technical and mechanical details of the contract, MEES quoted a source familiar with talks as saying.
MEES said Iraq state marketer SOMO will be allocated Baghdad’s 25 percent stake, while BP has cut its stake from 50 percent to 38 percent and CNPC has consequently boosted its participation from 25 percent to 37 percent.
The joint venture is slated to boost production at the southern Rumaila field from the current one million barrels per day (bpd) to around 2.85 million bpd over the duration of the contract.
The plan envisages adding 10 percent to production within a year and raising the field’s output by 300,000-400,000 bpd within three to four years, according to MEES.
Iraq’s total current oil production is around 2.5 million bpd.
BP and CNPC were the only companies to win a bid out when Iraq offered eight contracts at a June auction. The companies agreed to receive only two dollars a barrel to operate Rumaila, which has known reserves of 17.7 billion barrels.
It is the first big upstream deal between Iraq and foreign oil majors since nationalisation of oil about four decades ago.
The second round of bidding for Iraqi oil contracts is due in the first half of December, Oil Minister Hussein al-Shahristani said last month.
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BAGHDAD: Iraq has delayed the discussion of a stalled hydrocarbons law, seen as key to the country ramping up its oil production, until after parliamentary elections in January, a senior MP said on Saturday.
The proposed law, which would regulate the oil sector and divide responsibility between the central government in Baghdad and Iraq’s provinces, has been held up for three years due to disagreements between MPs from the country’s majority Shia and minority Sunni, Kurd and other communities.
“There is no agreement on the contents of the oil law ... because this government wants the management of the oil sector to be centralised,” said Ali Hussein Balo, a Kurd and chairman of the parliamentary oil and gas committee.
“Due to these conflicts, we have decided to delay the oil law enactment until after the election,” he told AFP.
Iraq hopes to be able to pump six million barrels per day, up from current output of around 2.5 million, within the next four to five years as new projects come online, Oil Minister Hussein al-Shahristani has said.
The country has the world’s third-largest proven reserves of oil, with more than 115 billion barrels, behind only Saudi Arabia and Iran.
But investment in Iraq’s ageing energy infrastructure has been hampered by delays to the hydrocarbons law.
When the government auctioned eight major energy contracts in June, only energy giants BP and China’s CNPC won a bid, agreeing to receive only two dollars a barrel to operate the giant Rumaila field, which has known reserves of 17.7 billion barrels.
It was the first big upstream deal between Iraq and foreign oil majors since nationalisation of the country’s oil production about four decades ago.
The second round of bidding for Iraqi oil contracts is due in the first half of December, Shahristani said last month.
“All the indications point to the fact there is no hope for putting the oil and gas law on the agenda during the time remaining for this parliament,” said Ali Hussain Balou, a Kurdish politician and sharp critic of Iraq’s Oil Ministry.
“Due to the insurmountable conflicts between political blocs, passage of this law could be delayed until the next parliament,” he said.
The global oil industry has been waiting for years for passage of the legislation, which includes a law on how to share revenues from oil exports between Iraq’s various regions and a law resurrecting the national Iraqi oil company.
But the laws have been tied up in an entrenched feud between minority Kurds and the Arab-led government in Baghdad over control of oil resources, land and power.
Investors see the law as crucial to establishing a clear legal framework that will minimise risks in a country already seen as fraught with security and legal dangers.
Iraq, which has the world’s third largest oil reserves, is struggling to modernise its oil sector and is courting global oil majors for long-term development contracts.
Iraq is due to hold its parliamentary elections on Jan. 16, the first national polls since 2005.
KHOBAR, Saudi Arabia: Saudi oil giant Aramco has awarded a contract to upgrade fuel plants to local firm M.S al-Suwaidi Industrial Services Co, two sources close to the deal said on Saturday.
The deal, awarded last month, is for the upgrade of 14 bulk plants in several regions in the Kingdom to raise the storage capacity for gasoline, diesel and fuel oil.
A bulk plant is a wholesale receiving and distributing facility for oil products. It includes storage tanks, warehouses and truck loading facilities.
Aramco is overhauling and expanding domestic distribution facilities to meet rapidly rising domestic demand.
The value of the procurement and construction contract is around $200 million, one of the sources said.
Suwaidi would have to sub-contract the engineering work to another company.
Construction work is expected to finish in about two-and-a-half years, the source said.
Saudi Arabia’s Nesma Group, Britain’s Petrofac, India’s Dayim Punj Lloyd, Italy’s Snamprogetti , South Korea’s SK Engineering & Construction, France’s Technip, and Spain’s Tecnicas Reunidas were among the bidders.
Aramco has also invited contractors last month to bid for the construction of a new fuel distribution plant in Wasea, in the kingdom’s central region.
The plant would have the capacity to handle 185,000 barrels of oil per day. (RTRS)
RIYADH: Saudi Arabia’s Kingdom Holding said the value of its investments available for sale rose 4.2 percent to 6.1 billion riyals ($1.63 billion) in September compared to the previous month.
The firm, owned by Prince Alwaleed bin Talal, attributed the gain to an improvement on local and international stock markets, according to a statement on the bourse website on Saturday.
This helped the firm reduce the total amount of unrealised losses to 15.41 billion riyals from 15.65 billion riyals in August, it added.
Kingdom is one of the largest shareholders in Citigroup and holds stakes in several other companies both in Saudi Arabia and abroad. (RTRS)
ANKARA: Turkey’s 12-month inflation fell slightly to 5.27 percent in September as the economy struggles in a severe recession that is curbing price increases, the statistics institute said Friday.
The consumer prices index increased by 0.39 percent from August when annual inflation stood at 5.33 percent, the statement said.
Factory gate prices, meanwhile, were up by 0.62 percent from August, marking a 0.47-percent increase over a year, it said.
The fall in inflation has been accompanied by interest rate cuts by the central bank, which most recently trimmed its key borrowing key rate by 50 basis points to 7.25 percent last month.
The bank has said inflation will undershoot the year-end target of 7.5 percent and the economy will contract sharply before returning to growth in the last quarter of the year.
Turkey’s once-booming economy contracted by a record 14.3 percent in the first quarter of the year and seven percent in the second.
The government has said the economy is expected to shrink by at least 3.6 percent this year, while the International Monetary Fund has forecast a 6.5-percent contraction. (AFP)
