After several months of negotiations and pressure from the Iraqi government, BP PLC (BP) and Exxon Mobil Corp. (XOM) have finally submitted proposals to the Iraqi oil ministry on technical services contracts to boost production at Iraq's prized oil fields, sources close to the Iraqi ministry said Tuesday.
Other oil majors, which have been negotiating similar deals with Baghdad, haven't yet submitted their plans, but they would follow suit, according to these sources.
Iraq's Oil Minister Hussein al-Shahristani has threatened to cancel these technical services contracts, or TSC, if they are not signed in June. The TSCs are designed to boost Iraq's crude oil production in producing oil fields.
BP and Exxon Mobil's proposals include suggestions on how Iraq would pay them back for their services and the costs of equipment. The Iraqi oil ministry needs to approve these proposals before signing the contracts. Iraqi oil officials have said that each TSC would cost around $500 million.
"As far as I know both BP and Exxon Mobil have submitted their final drafts to the ministry," an Iraqi oil source told Dow Jones Newswires. "Both will be the first oil companies to sign with the ministry technical services contracts," another source said.
Earlier, Iraqi oil sources said these TSCs could be signed as early as June. Each would last two years and could be extended for another year.
The U.K. and U.S. majors, concluded talks in Amman with oil ministry officials earlier this month to increase production at the two super oil fields. BP is to boost production in the North and South Rumaila fields currently producing around 1 million barrels a day but output is declining steadily. While Exxon is to increase output at Zubair oil field, which is now producing some 200,000 barrels a day.