CNPC Operations in Iraq

= History =

CNPC's involvement in Iraq dates back to 1997, when CNPC signed a deal with Saddam Hussein's government to develop the Ahdab oilfield. The deal was between Al-waha Petroleum Company, (a joint venture between the CNPC and China North Industries Corporation) and the Iraqi government at the time. However, this agreement was postponed due to the UN sanctions on Iraq and the subsequent US-led invasion of the country in 2003. CNPC renegotiated the deal for the Ahdab oil field with Iraq's Ministry of Oil in 2008. Since then CNPC has also won contracts as part of two separate consortia to develop the Halfaya and Rumaila oil fields.

= Activities and Contracts =

Ahdab
Under the terms of the service contract renegotiated in 2008, oil output from Ahdab would rise to 110,000 barrels per day (bpd), up from the 90,000 bpd forecast in the original deal; and total investment in the project would be about US $3 billion. CNPC began work on the field in March 2009, despite protests from local farmers, and in June 2011 announced that it had completed construction of the first phase of the project.

Halfaya
In 2009 CNPC led a consortium which won the contract to develop Halfaya, with CNPC holding a 37.5% stake in the project. Total and Petronas held 18.75% each and Iraqi state-run South Oil Company held the remaining 25% stake. .

Rumaila
In June 2009 CNPC was part of a BP-led consortium which won a service contract to develop the Rumaila oil field, Iraq’s largest. The long term contract secured by the BP-led consortium was the first in post-2003 Iraq; CNPC holds a 37% stake in the venture, with BP holding 38% and the Iraqi state the remaining 25%. BP has said that together with CNPC will spend around US $15 billion at Rumaila. CNPC received a 2 million barrel cargo of crude as its first payment for developing Rumaila in May 2011.

West Qurna 2
Bloomberg reported in August 2012 that CNPC was in talks with Russia's Lukoil about joining the company’s West Qurna 2 project, according to energy intelligence group Nefte Compass. The energy group reported that Lukoil was seeking a partner for a 30% stake in the project following Statoil’s exit, citing Andrei Kuzyaev, head of Lukoil Overseas.

=Discount oil sales= Reuters reported in November 2012 that Iraq was struggling to find buyers for all its 2013 oil output on term contracts because of the variable quality of Iraqi oil, official prices that buyers believed were too high and the availability of cheaper spot supplies. CNPC was offering barrels at up to an US $0.80 discount to Iraq's official prices; Reuters quoted an Iraqi official as saying "We are not happy about this." The official said that CNPC and other companies such as BP are paid in crude for their development contracts, and are entitled to re-sell the oil provided they "officially inform" SOMO.

= References =