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BP says Iraq govt delay has no effect on Rumaila

Work on Iraq's biggest oilfield moving ahead.

September 21, 2010 2:49 by

British oil major BP Plc sees no effect on its work on Iraq’s biggest oilfield from a political impasse that has delayed the formation of Iraq’s new government for more than six months, a BP executive said.

BP is moving ahead with developing the supergiant Rumaila oilfield and could award new contracts for work in the field later in the year, BP Iraq’s President Michael Townshend told Reuters.

“We have not seen any delays in contracts that caused us to reduce or stop our work,” he said.

Iraq held a general election in March that produced no outright winner and as yet no new government.

Most of the work in the field does not need approval by Iraq’s cabinet, said Townshend, shrugging off concerns that the lack of a new government and of a functioning parliament in Baghdad is holding up tenders.

Contracts worth more than $20 million is reviewed by the Rumaila joint management committee (JMC), and contracts of more than $100 million are reviewed “with a time limit” by state-run South Oil Co., he said.

Rumaila, with 17 billion barrels in estimated crude reserves, is the workhorse of Iraq’s oil industry, producing almost half its total output of 2.5 million barrels per day.

BP and its Chinese partner CNPC signed a 20-year development contract for Rumaila and expect to increase output to 2.85 million bpd. If achieved, that would put Rumaila in second place worldwide after Saudi Arabia’s Ghawar, the world’s largest oilfield.

The deal is part of a series of development contracts Baghdad signed with global oil companies to develop Iraq’s vast oil reserves. If all the projects turn out as planned, Iraq could boost its capacity to Saudi levels of 12 million bpd.

The plan to boost crude output in Rumaila includes a major oil well drilling programme that will continue through 2011. International service companies have been awarded contracts worth nearly $500 million to drill 49 new wells in Rumaila.

BP and its partners aim to put in over 50 electric submersible pumps (ESP) this year, said Townshend.

In addition, new generator sets are being installed, and work is moving ahead on connecting existing wells to the degassing stations and on well refurbishment, which is being carried out by some 14 well rigs now.

“We will be replacing rigs that were on SOC contract at the end of year, but on an overall basis I would expect the total number of workover and drilling rigs to remain relatively steady through next year,” he said.

“In addition to these contracts we should be in place to start awarding the start of seismic and some engineering work.”

Drilling new wells, overhauling existing ones and installing electric submersible pumps are ways to overcome the natural decline of the field and boost production.

Current crude production is “a little over 1 million barrels a day”, he said, declining to give a specific output figure. If left alone the natural decline of the Rumaila field is around 15 percent per year, he added.

In May, Salah Mohammed, head of the Rumaila Division at the South Oil Co, said production from Rumaila was around 1.045 million barrels per day (bpd), and expected to reach 1.150 million bpd of crude by the end of the year.

“Everything that we have seen so far, shows that the ability of the reservoir to produce is still fundamentally there,” said Townshend. “That is really reassuring.”

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