Rumaila oil field

Rumaila, together with the northern 'supergiant' Kirkuk field, have historically made up most of Iraq's oil production, and as of 2012 production at Rumaila made up for more than a third of Iraq's total crude output. Prior to 2009 Rumaila was seen as two contract areas, Rumaila North and Rumaila South, but in the 2009 bidding rounds they were bundled together into one asset.

The field is located in the Basra region of southern Iraq, about 20 miles from the Kuwaiti border. Discovered in 1953 by an expedition from British Petroleum, it was nationalized by Saddam Hussein and subsequently became Iraq's chief source of revenue. Rumaila is estimated to contain approximately 15% of all Iraqi oil reserves, and as of 2011 the field accounted for 40% of the country's oil production.

Rumaila's 17.7 billion barrels of proven reserves are said to be sitting less than 8,000 feet below the surface of the earth, making them an easy target for drilling.The oil at the site is sweet (low in sulphur) and around 34°API Gravity.

Contract Negotiations

Two consortia bid for the Rumaila development in the first licensing round in 2009, one led by ExxonMobil and the other by BP. The Ministry of Oil announced that the ExxonMobil group had originally scored more points in the evaluation than the BP group, but that both groups were above the maximum remuneration fee of $2 a barrel set by the Ministry. Exxon declined the offer to meet the maximum fee but BP accepted and thus won the contract. The deal included a signature bonus of $500 million, which was intended to be a 'soft loan' repayable over five years.

The CNPC percentage of ownership in the consortium appears to have significantly increased between the mid-2009 bid and when the deal was signed in November. A June 2009 press release announced that BP held a 66.67% stake and CNPC 33.33% of the international component of the bid. Once the 25% involvement of the South Oil Company was taken into account the stakes work out as 50% to BP and 25% each to CNPC and South Oil Company. However official announcements that followed indicated that the split was 38% for BP, 37% for CNPC and 25% to the Iraqi state.

The BP-led consortium offered to take production to 2.85 million barrels per day (bpd), lower than the 3.1 million bpd offered by the ExxonMobil-led consortium. However in December 2012 BP was in talks with the government to cut this production target to between 1.8 million and 2.2 million bpd, on the back of problems provoked by ageing infrastructure, red tape and a lack of clear oil legislation.

Production and Exports

According to a BP press release, the Rumaila Field Operating Organisation (ROO) will manage the rehabilitation and expansion project at the field. ROO was to be staffed mainly by employees from the state-owned South Oil Company and contain a small number of technical experts and managers from BP and CNPC.

Over the course of 2010 BP and CNPC drilled only 41 out of the 70 wells originally planned. However the general manager of the ROO stated at a conference in 2011 that the consortium was planning to increase production by around 10%, or 130,000 barrels per day (bpd), at Rumalia in 2012. This was hoped to boost output to around 1.43 million bpd. However by the end of 2012 the field was producing only around 1.35 million bpd.

Through 2011 production at the field suffered a number of setbacks. In September 2011 an explosion ocurred, injuring at least 15 people and resulted in a temporary drop in production which was promptly resumed after repairs. A further explosion hit Rumaila in October, said to be a bombing targeting pipeline networks. Three days later another explosion ocurred when a pile of mines exploded prematurely while being disposed of, killing two army officers and four deminers.


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