Concerns over terms of Rumaila field contract as war-torn state opens up rights to huge energy assets for first time in 40 years
01.07.2009 A BP-led consortium has won the rights to develop Iraq's largest oil field after an exhaustive tender process that opens the brittle state's huge gas and oil assets to foreign exploration for the first time in almost 40 years.
BP and its Chinese partner CNPC clinched a deal to join an Iraqi state-owned enterprise to develop the Rumaila field in Iraq's south – the largest of the country's six giant oil sites.
Rumaila's reserves are estimated at close to 18bn barrels. Under the terms of the 20-year contract, BP and CNPC have six years to increase production at Rumaila to a minimum output target of 2.85m barrels per day.
Iraq's oil minister, Hussein al-Shahristani, said BP and CNPC had agreed to be paid $2 (£1.21) per barrel if they reached the target — significantly less than their asking price of $3.99 per barrel.
However, the company later claimed it was satisfied with the deal. Analysts said Rumaila was the most attractive of the eight contracts on offer in the auction.
BP's offer was the only one accepted by the Iraqis. The other bids were rejected because they sought more profit than the oil ministry was prepared to give away.
Analysts said that many of the oil companies involved in the bidding believed they would struggle to break even under the terms on offer... (says Guardian.co.uk)