BP Plc and China National Petroleum Corp. will drill and upgrade wells to raise output from Iraq's largest oil field of Rumaila and plan to increase oil production by 100,000 barrels per day by the end 2010.
CNPC and partner BP Plc will take over full management of the oil field by June 30, China National Petroleum said in its online newsletter April 20, 2010.
BP plans to increase production at Rumaila from 1.07 million barrels a day to 1.23 million barrels within 12 months.
Energy consultants IHS CERA say Iraq's plan to increase production is "extraordinarily ambitious" and predicted an increase of just less than two million barrels of oil a day by 2015.
The largely undeveloped Nassiriya field is listed as having reserves of under 5 billion barrels. Nippon Oil Corp had projected it could pump up to 200,000 bpd within two years but negotiations broke down and Iraq will drill with its own national oil companies. Iraq plans to drill 10 new oil wells in Nassiriya this year, Jaafar said. "We are capable of boosting production from Nassiriya from 10,000 bpd to 50,000 bpd by the end of 2010," he said.
Oil Services Companies Have a $40 Billion Opportunity
Seeking Alpha article by Morningstar - The success of the recent Iraqi oil auctions has created a multi-billion dollar opportunity for major oil services firms such as Schlumberger (SLB), Baker Hughes (BHI), Weatherford (WFT), and Halliburton (HAL).
If we assume that Iraq oil production reaches 8 million barrels per day by 2016, which reflects 75% of the committed targets, we expect there could be up to $40 billion in services contracts available from 2010 to 2016 for the industry's drilling and services expertise.
Even if one third to one half of the awards go to local Iraqi firms for nationalistic reasons, we believe all four major services firms will benefit from this unprecedented opportunity. Currently, Weatherford has the early lead in the region, with several rigs drilling under contract. The company also shared along with Schlumberger in BP's (BP) $500 million award for services work in Iraq's Rumaila field. The other major services firms are behind for now, but rapidly building out their infrastructure, and hiring workers in the country. We expect that Iraq-related revenue for each of the major players could cross $1 billion annually by 2013. We think Schlumberger will regain its traditional position as the industry leader, thanks to its experience and comprehensive product portfolio. The merger with Smith (SII) could strengthen Schlumberger's position in the region, provided that there are no integration or divestiture issues.
Oil and gas companies indicated that they plan to target easy-to-drill wells to boost the fields' initial production rates by 10%, which will trigger the cost-recovery portion of the contracts. After the first year, the drilling will graduate to more technically challenging wells. Therefore, we expect that the services firms will be able to generate above-average margins drilling easy wells for the first year, and Iraq oil production should move towards 2.6 million barrels per day by the end of 2010
Schlumberger Q1 2010 Earnings call transcript. Schlumberger talks about the phases of the Iraq oil field development plans.
Hallirburtong Q1 2010 earnings call transcript
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