BP hearts Iraq, even at $2 a barrel

Sure, it’s politically tricky and a security nightmare. But Iraq also has abundant, easily-accessible oil.

BP’s involvement in Iraq came under scrutiny as the company announced its results today. BP, together with China’s CNPC, won the right develop Iraq’s Rumaila oil field last month – but it was the only successful bid after many bidders pulled out when Iraq said winners would only receive $2 per barrel. This was half the amount in the original BP/CNPC bid.

Despite this, chief executive Tony Hayward was bullish about the prospects for BP in Iraq today.

Not only was BP not planning to reduce its stake in the bid, (as was reported last week), but the company planned to build a “big position” in the country, he said.

On Rumaila itself, Hayward played up BP’s knowledge of the field, which we’ve previously described here. He said BP had discovered the field and had been helping develop it for five years.

“So we have a very good view of the subsurface and what the opportunity is,” he said.

“We expect it’s profitability by way of returns to be commensurate with other things we are developing.”

And as for partnering with a Chinese company? It’s all about the supply chain, he said.

“The relationship with CNPC provides us with the opportunity to access in a very unique way the Chinese supply chain,” he said.

By which he presumably means equipment, material, and perhaps labour.

Related links:

Bold, Brazen or Bonkers Petroleum (FT Energy Source, 01/07/09)
Why do international oil companies partner with Chinese NOCs? (FT Energy Source, 20/04/09)

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