Iraq & CNOOC Close to Maysan Deal

The Iraqi Oil Ministry has concluded talks with Hong Kong listed CNOOC Ltd. and its partner, Sinochem International Corporation, relating to the development of the three Maysan fields in southern Iraq and has submitted a draft contract to the cabinet for final approval, said one official familiar with the talks.

CNOOC would hold a 60% stake in the venture; Sinochem will own 15% and an Iraqi state company will hold the remaining 25%, according to the ministry, the Wall Street Journal reported citing the ministry. Oil Ministry Spokesperson, Assem Jihad, said the Chinese duo has accepted Baghad’s proposed fee of US$2.30 per barrel, much lower than their earlier proposed fees.

The partners had reportedly proposed a fee of US$21.40 per barrel in June 2009 and suggested raising production from the Fakka, Buzurgan and Abu Ghirab fields to 450,000 bpd. That was lowered down to US$18.09 per barrel on the second bid. The Chinese firms were the only companies that bid last year for Maysan oil fields. Other companies were discouraged from bidding for the fields because some of them are in a disputed area near the border with Iran.

In December, Iranian troops occupied an Iraqi well in the Fakka field bordering Iran and caused a political and diplomatic row between the two countries. Last month the Baghdad government said that Iran withdrew its troops from the field but wanted negotiations to demarcate the borders. Iraq has set a minimum production plateau target of 275,000 bpd from the Maysan fields, which are producing 100,000 bpd. - Upstream