< Back to Iraqi Dinar in the News October 19th, 2011

Iraq Projects $100 Billion Investment in Oil Fields

ISTANBUL—Exxon Mobil Corp., BP PLC and Eni SpA will spend around $100 billion to upgrade three oil fields in southern Iraq, an Iraqi official said.

Thamer Ghadhban, the top energy adviser to Iraq's prime minister, said about $50 billion would be spent to upgrade the big West Qurna Phase 1 oil field which is being developed by Exxon Mobil. The remaining $50 billion will be spent by BP and Eni to upgrade the Rumaila and Zubair oil fields, respectively, he said Wednesday on the sidelines of an Iraqi energy conference here.

The huge investment would help unleash Iraq's massive oil reserves, whose development was stunted by years of sanctions under Saddam Hussein's regime and then continued strife after his downfall.

The three fields now pump around two million barrels a day, making up the bulk of Iraq's total output of 2.9 million barrels a day.

Production from the three fields is to reach at least 6.8 million barrels a day in 2017, according the deals signed by the companies two years ago. That could turn Iraq, a member of the Organization of Petroleum Exporting Countries, into one of the world's largest producers of crude oil. Iraq is one of the few places where giant oil deposits have been left largely untapped, according to the U.S. Energy Information Administration.

Mr. Ghadhban said that the bulk of the investment would go to West Qurna because the Rumaila and Zubair fields are well advanced in terms of infrastructure development.

The companies' 20-year contracts stipulate that they invest to develop the fields and then would start receiving costs and remuneration fees for barrels produced above a 10% baseline output increase.

A spokesman for U.K.-based BP said it was too early to forecast the exact size of the group's investment in Rumaila. "We're working with our partners and the Iraqi government on a detailed field-development plan. Obviously, our plan is to invest enough to reach the production targets agreed in our contract," he said.

Italy's Eni said last year that a consortium formed by the Italian company, California-based Occidental Petroleum Corp. and Korea Gas Corp. would invest about $20 billion during the life of the Zubair contract.

U.S.-based Exxon Mobil didn't immediately respond to requests for comment.