Occidental consortium signs Iraq oil field deal

A consortium made up of Italy's Eni, California-based Occidental Petroleum Corp. and Korea Gas Corp. signed a final deal in Baghdad on Friday to develop the Zubair oil field in southern Iraq.  The deal is one of several that IraqÔÇÖs government hopes will transform it into a major global oil producer.  The consortium plans to invest approximately $20 billion into Zubair over the life of the 20-year contract, which has the potential to be extended to 25 years. It also hopes to increase the field's production to 1.2 million barrels a day from the current level of 195,000 barrels a day.  The consortium won the right to develop the Zubair field, which is based near Basra and contains an estimated four billion barrels, at Iraq's first post-war licensing auction in 2009.  Under the terms of the deal, the consortium will be paid $2 for each extra barrel of oil they extract above the fieldÔÇÖs current production levels. They will, however, be liable for a 35 percent tax on profits.  The consortium originally requested $4.80 for every extra barrel produced; but later revised its bid to match Iraq's offer.  Eni has a 32.81 percent stake in the project; Occidental Petroleum holds a 23.44 percent stake; Kogas an 18.75 percent share; and Iraq's state-run Missan Oil Co. the remaining 25 percent.  The deal is being widely viewed as a strong move for Los Angeles-based Occidental, strengthening its status as a Middle East player via terms that limit its exposure to potential problems.  ÔÇ£Oxy is a very active and cooperative partner in many successful projects across the Middle East, and we expect similar success in Iraq,ÔÇØ commented Ray R. Irani, chairman and chief executive officer of Occidental Petroleum.  ÔÇ£We are pleased to join with the Iraqi government, the Iraqi people and our consortium partners in developing one of the worldÔÇÖs great oilfields.ÔÇØ  Last week, Iraq finalized a deal with Royal Dutch Shell and Malaysia's Petronas to develop the Majnoon oil field in the south of the country.  A deal was also concluded with Petronas and Japan Petroleum Exploration Co., known as Japex, to develop the Garraf oil field in the same region.  A deal is also pending with Exxon Mobil and Shell to develop the West Qurna Phase 1 oil field in the south.  Iraq is hoping that the deals will eventually enable it to produce five times the amount of oil it currently produces.