Basra, Iraq: Iraq signed revised contracts with foreign oil companies for two southern oilfields on Thursday that reduced their production targets and extended the life of the deals, Iraqi oil officials said.

The revised deal with oil major BP for Iraq’s giant Rumaila oilfield cut the planned plateau level to 2.1 million barrels per day from 2.85 million bpd, Salah Mohammad, general manager of the Rumaila Operating Organisation, told Reuters.

Iraq also agreed with China’s CNPC to slash the final output target from the Halfaya oilfield to 400,000 bpd from 535,000 bpd, Adnan Noshi, head of state-run Maysan Oil Co, said.

Iraq had set an overall production capacity target of 12 million bpd by 2020, which would rival that of top oil exporter Saudi Arabia, after it signed service contracts in 2009-2010 to develop its southern oilfields.

Oil majors working in Iraq include BP, leader at Rumaila; ExxonMobil, in charge of West Qurna 1; and Royal Dutch Shell, operator of Majnoon.

But crumbling infrastructure, red tape and a lack of clear oil legislation have stunted investor interest. Iraq has repeatedly failed to reach its ambitious targets, and current output from the southern fields is around 3 million bpd.

Baghdad has reduced the overall capacity target to 8.5-9 million bpd and returned to the negotiating table to discuss revised plateau production rates with oil companies.

New goals

Rumaila, the workhorse of Iraq’s oil industry which BP operates with CNPC, has estimated reserves of 17 billion barrels. It currently produces around 1.3 million bpd, Salah said, adding he expected that output level to remain steady for the rest of the year.

Officials from BP and Iraq’s oil ministry signed the amendment to the existing contract, originally agreed in 2009, in a closed-door meeting at Rumaila on Thursday.

“Iraq and BP have reached an agreement to cut Rumaila’s production target to 2.1 million bpd,” Salah said.

“It was (also) agreed to extend the timeframe to reach the new final production of 2.1 million bpd to 10 years from seven years that had been agreed upon before,” he added.

A BP spokesman said that under the amendment to the existing technical service agreement, the partners “plan to raise plateau production by about 800,000 b/d within the next decade to some 2.1 million b/d”.

CNPC, operator of Halfaya, is developing the field with France’s Total and Malaysian state company Petronas.

Maysan’s Noshi said Halfaya’s amended contract had been extended to 30 years from 20. Halfaya currently produces 200,000 bpd and it is expected to boost output to 230,000 bpd by the end of this year, he added.

Iraq’s giant southern fields have not been affected by Baghdad’s fighting with Islamist insurgents.