Iraq’s oil ministry is in talks with BP on how to proceed with the plan to boost oil output at Rumaila, the country’s largest oil field, from around 1.4 million bpd currently to 2.1 million bpd. The discussion occurred as oil prices remained weak at around $40/barrel, while BP has slashed its 2020 global spending plan by 25% to $12 billion. At the same time, Iraq is part of the OPEC+ coordinated supply cut deal, whereby other participating producers had urged Iraq to cut production deeper to compensate for overproduction in the past months. Baghdad also requested foreign oil firms to reduce activity and cut their capex by 30% this year.
BP is the lead contractor for Rumaila with state-owned Basra Oil, state marketing firm SOMO, and PetroChina. The recoverable oil at Rumaila is estimated at 17 billion barrels. Its production has been lower than 1.5 million bpd over the last couple of years under the 20-year technical service agreement that will end in 2034. BP Iraq head, Zaid Elyaseri, said that the company had cut capex by 30% at Rumaila as per the government’s request. It also postponed some projects in the field.
One of the delayed projects is the water re-injection project that was approved in 2019. Rumaila Operating Organization (ROO) requires the project to increase production for the short- and long-terms. Approximately 1.4 million bpd of water is injected to keep Rumaila’s reservoir pressure, and around 500,000 bpd of water is extracted from the produced oil when it is cleaned.
BP has announced a major push to shift toward low-carbon energy and expected its oil and gas production to decrease by at least 1 million boepd (40%) by 2030. Rumaila’s carbon intensity stands at 15.02 grams CO2 equivalents per megajoule, higher than Iraq’s average of 13.717 grams. Iraq also flared some 18 Bcm of gas in 2019, the world’s second-largest after Russia.
