Dubai/Cairo: ENI SpA and partners including Occidental Petroleum Corp. plan to spend about $1 billion (Dh3.67 billion) a year to boost production at Iraq's Zubair oil field by one million barrels a day after winning rights to develop the deposit.
Iraq, holder of the world's third-largest oil reserves, signed a 20-year development contract for Zubair with the group led by ENI, Italy's largest oil company, in Baghdad yesterday.
ENI and partners Occidental and Korea Gas Corp. will "start working from [today] to create a development plan and rates of production and investment" for the Zubair project, Iraq's Oil Minister Hussain Al Shahristani said yesterday.
Iraq, seeking foreign investment to rebuild infrastructure and boost crude sales, awarded eight service contracts to develop its oil deposits after two auctions last year.
The Oil Ministry agreed on development terms for seven out of 10 projects put up for auction in December after only one field out of eight was assigned in Iraq's first auction in June.
The partners agreed to raise production at Zubair to 1.2 million barrels a day within six years and to maintain that level of output for seven years, the Italian company said in a statement yesterday.
The ENI-led group will invest about $20 billion over the 20-year lifespan of the contract, which can be extended for another five years, ENI said.
Total investment in the field could reach about $26 billion, Korea Gas, the world's biggest buyer of liquefied natural gas, said in a filing last week. The company, also known as Kogas, said it plans to invest about $6.5 billion in Zubair.
ENI may spend about $11.4 billion for its share of the cost of developing Zubair, Il Sole 24 Ore reported on Thursday, citing calculations based on the Kogas filing.
Nine-year supply
Zubair may hold 4.2 billion barrels of crude, Ray Irani, chief executive officer at Los Angeles-based Occidental, said in an October 22 conference call with investors and analysts. That would be enough crude to supply every refinery on the US East Coast for more than nine years.
ENI will hold a 32.81 per cent stake in the project with Occidental having 23.44 per cent, Kogas 18.75 per cent and Iraqi partner Missan Oil taking a 25 per cent share.
