Iraq and BP yet to agree on water injection project costs


Iraq and BP haven't yet reached an agreement on reimbursement of costs to build a multi-billion-dollar oil field water injection scheme in southern Iraq, a senior Iraqi oil ministry's official has said.

ExxonMobil Corp was chosen on behalf of foreign oil companies upgrading Iraqi oil fields to lead the project, needed to boost crude oil production rates from Iraq's southern oil fields.

International oil companies have expressed a willingness to set up the common water injection project, and include Russia's Lukoil Holding, Italy's ENI and UK-Dutch oil major Royal Dutch Shell which is expected to join later, Nihad A. Mousa, head of the State Company for Oil Projects told Dow Jones Newswire.

"BP wants to start reimbursing the costs of the project when foreign firms increase output from these fields by 10 per cent, while the ministry wants to pay back costs when they boost output by 20 per cent," Mousa said.

However, a BP spokesman said that the UK supergiant "strongly supports the common seawater project, the terms for which are defined in the Rumaila Technical Service Contract", and that it is "working with ExxonMobil and the government of Iraq to move it forward."

BP is developing Iraq's largest oil field, Rumaila, near Basra which is producing around 1.3mn barrels a day.

Under the service contract it signed with Baghdad in 2009, BP would start reimbursing its costs when it increases output from the field by 10 per cent.

ExxonMobil, Shell, ENI and Lukoil have no problem with agreeing to the payment terms of the project, Mousa said.

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