China initials Halfaya contract

China initials Halfaya contract

January 7, 2010

The Chinese National Petroleum Corp is a step closer to getting its third Iraq oil contract finalised after a ceremony at the Iraqi Oil Ministry headquarters where officials initialed a draft contract. The field was awarded during a Dec. 11 and 12 oilfield projects auction intended to lead to a massive increase in oil production. The contract must now be sent to the Council of Ministers for approval. Halfaya was awarded to a CNPC led consortium, with Petronas and Total each having a 25 percent stake. The three must split profits with state partner South Oil Company, which receives 25 percent. Profits come from the remuneration fee, which is the amount the government pays to the companies for each additional barrel of oil produced. CNPC agreed to $1.40 per barrel remuneration fee.

It will increase production of Halfaya from nearly nothing now to 535,000 barrels per day within seven years and sustain that for 13 years. The winning bid beat out offers from Statoil with junior partner Lukoil; ONGC with TPAO and Oil India; and Eni with Sonangol, CNOOC, Kogas and Occidental. This is the third contract from the auction initialed. Petronas did so for Garraf Monday.

Source: Upper Quartile