OAO Lukoil Holdings (LKOH.RS), Russia's largest non-state oil producer, aims to produce 150,000 barrels of oil a day at Iraq's West Qurna Phase 2 oilfield in 2013, an output level that triggers cost recovery and service fee payments, a Lukoil executive said Wednesday.
OAO Lukoil Holdings (LKOH.RS),
Russia
's
largest non-state oil producer, aims to produce 150,000 barrels of oil a day at
Iraq
's
West Qurna Phase 2 oilfield in 2013, an output level that triggers cost
recovery and service fee payments, a Lukoil executive said Wednesday.
The 13-billion-barrel West Qurna-2 is one of the major fields alongside
Rumaila, West Quran-1, Zubair and Majnoon that the member of the Organization
of Petroleum Exporting Countries is developing with foreign companies in the
south as it recovers from years of war and sanctions.
Lukoil will invest some $30 billion to upgrade the field, said Sergey
Nikiforov, senior vice president for Development and Production at Lukoil
Overseas Holding Ltd.
Lukoil will produce some 150,000 barrels a day from West Qurna-2 at the end of
2013, Nikiforov added.
"We are planning to increase output from the field to 500,000 b/d in the
second quarter of 2014, he said on the sidelines of the start of drilling
operations at the field in
Southern Iraq
.
Iraqi oil minister Abdul Kareem Luaiby, Iraq's state-run South Oil Co. and
Lukoil officials Wednesday also marked the beginning of work at the field's
central processing facility with a production capacity of 500,000 barrels a
day. The project will be built by
South
Korea
's Samsung Engineering Co. (028050.SE).
The West Qurna-2 oil field development project is one of 10 that
Iraq
awarded in two licensing rounds in 2009 and 2010. If all the companies deliver
to the letter of their contracts, nearly 9 million barrels a day of capacity
will be added to Iraq's existing 2.9 million barrels a day by 2017, though half
that amount looks more achievable given infrastructure hurdles and logistical
bottlenecks.
Operator Lukoil and
Norway
's
Statoil ASA (STO) were awarded a 20-year service contract in
Iraq
's
second licensing round held in December 2009. The pair promised to get the
southern field pumping at a rate of 1.8 million barrels a day for payment of
$1.15 a barrel.
For the undeveloped second-round oil fields, companies will start to recover
investment costs and be paid for their services after initial commercial
production is hit. In the case of West Qurna-2, that rate is 120,000 barrels a
day.
Lukoil and its partners have awarded a series of contracts to international oil
services companies, the most important of which was the $1 billion deal to
Samsung Engineering Co. earlier this year.
Samsung would build many projects in the field including a central processing
facility, or CPF, to produce 500,000 barrels a day from West Qurna-2. Work on
the facility is expected to take 29 months to complete from start of work.
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