A consortium led by Italian energy giant ENI has won the contract to exploit IraqÔÇÖs Zubair oilfield, following a successful first round bid.
The consortium consists of Rome-based operator ENI, Occidental Petroleum Corporation of the United States and South Korea-based Korea Gas Corporation.
Chinese state-owned oil firm Sinopec was also a consortium member but has reportedly been blocked from the deal by Iraqi authorities, due to its involvement with oil operations in the semi-autonomous region of Kurdistan in the north of the country.
Iraqi state-owned Southern Oil will hold a 25 per cent share in the project.
Zubair, which is located in the south of Iraq and has reserves of around four billion barrels, currently produces around 227,000 barrels of oil per day. It is the countryÔÇÖs fourth-largest oilfield.
It is expected that the ENI consortium will increase production to 1.125 million barrels per day within seven years, requiring an investment of around $10 billion (Ôé¼6.7 billion).
ÔÇ£The award of the explorative licence for the Zubair field strengthens the long-term collaboration between ENI and Iraq, which dates back to the 1970s, and will allow ENI to further grow its production and reserves,ÔÇØ the Italian firm said in a statement.
Under the terms of the deal, ENI and its partners will receive $2 for each barrel over 1.125 million barrels per day they are able to produce.
Like many other firms, ENI rejected the $2 deal in IraqÔÇÖs original round of bids in June this year, but after authorities adjusted some of the other terms contained within the contract, its overall value was raised and ENI was able to accept.
Iraq is currently in discussions with some other companies that rejected contract terms in June, including RussiaÔÇÖs Lukoil, US firm ConocoPhillips and Royal Dutch Shell.
The Zubair project will include the drilling of over 200 wells, the construction of treatment facilities and the refurbishment of existing plants.
The contract lasts for 20 years, with an option for it to be extended to 25 years.
ENI already has a strong presence in the Middle East, where it operates in exploration, drilling, engineering and construction.
The ENI consortium is only the second group of foreign oil majors to enter Iraq in 40 years.
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