Iraq signs preliminary deal to develop southern oil field

20:37, December 21, 2009      

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Iraq signed a preliminary deal with an oil consortium comprised of Malaysia's Petronas and Japan's Japex on Monday to develop a southern oil field.

The contract on Garraf oil field located in the south was signed in a ceremony held at the building of Oil Ministry in Baghdad. The 20-year deal still needs to be approved by the country's cabinet.

The two companies won the right to develop the oil field with estimated reserves of 863 million barrels during the latest auction on Dec. 11-12, which awarded seven contracts to international oil firms.

The pair proposed to produce 230,000 barrels per day (bpd) from the oil field with a remuneration fee of 1.49 dollars for each barrel produced.

On Sunday, the ministry signed another preliminary contract with an oil consortium led by European energy giant Royal Dutch Shell PLC and Malaysia's state-run Petronas to develop Majnoon super giant oil field which is located near Iraq's southern oil hub of Basra, some 550 km south of Baghdad.

The Shell-Petronas consortium proposed to raise the crude oil output from the current level of about 45,900 barrels per day (bpd) to 1.8 million bpd. The two companies will be paid 1.39 dollars for each barrel produced.

Iraq is aiming to increase its crude oil output capacity, currently at roughly 2.5 million bdp, to 12 million bpd in six or seven years.

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