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The Times: BP talks explore potential of Iraqi oil assets

February 6, 2008
Robin Pagnamenta

BP is in talks with the Iraqi Government about a plan to boost oil production at the huge Rumaila field on the border with Kuwait.

Tony Hayward, chief executive, said that he had met Hussain al-Shahristani, the Iraqi Oil Minister, “in the last few weeks” to discuss opportunities in the country.

Among other potential projects in Iraq, BP’s interest is understood to include the Rumaila field, one of Iraq’s largest, which is believed to contain about 18billion barrels of oil, according to figures from Wood Mackenzie.

BP undertook a study of the field for the Iraqi Government two years ago. It already has a small Iraq team based in the Middle East and is one of a number of big oil companies discussing agreements designed to increase rapidly the country’s output to 2.6million barrels per day by the end of this year.

These effectively would be service contracts to provide training, expertise and equipment, for which the companies would be paid in oil.

BP, Total, Shell, ExxonMobil, Chevron and ConocoPhillips attended talks with the Iraqi Government in Amman, Jordan, last month to help to fix the terms of the contracts. Shell is interested in a gasfield in western Iraq.

A spokesman said that it was too early to consider putting in expatriate staff because of the security situation.

BP was involved in Iraq until 1975, when the country’s oil industry was nationalised.

Speaking at the group’s results presentation yesterday, Mr Hayward said that as well as the Iraqi Oil Minister he was also involved in talks with Gazprom, of Russia, over a proposed asset swap that would involve BP’s Kovykta gas project.

He admitted that talks had been taking longer than planned, mainly because of the scale of the assets and the number of parties involved.

Creating a “balanced structure” that would be acceptable to BP, TNK-BP and Gazprom had been “difficult and complicated”.

“The constructive dialogue continues,” he said, but there was no certainty that an agreement could be reached soon.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3315476.ece

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