Russia's Lukoil and Iraq's Basra Oil Company signed a new development plan for West Qurna 2 project in Iraq, envisaging the project's crude production growing by 20% to 480,000 b/d in 2020, and hitting the plateau of 800,000 b/d in 2025, Lukoil said Friday.
Russia's second largest crude producer, which entered West Qurna 2 in 2010 and launched production at the field in 2014, has long been negotiating with Iraqi authorities new conditions for the second development phase of its key foreign asset, calling for more favorable terms than in the first phase and proposing ways to improve the project's economics.
The parties last year announced the second downward revision of the project's target output, initially set at 1.8 million b/d and subsequently cut to 1.2 million b/d following the 2014 oil price drop, which forced Iraq's oil ministry to request a slowdown in oilfield investments to reduce contractor payments.
The field, in Southern Iraq and estimated to hold 12.9 billion barrels of recoverable crude reserves, currently produces 400,000 b/d, or 9% of Iraq's total crude output, according to Lukoil.
Lukoil's CEO Vagit Alekperov said earlier this year the field would reach the new production plateau in 2024, while Iraq's oil minister Jabbar al-Luaibi said last August the field would hit the plateau within three years.
The agreement envisages 550,000 b/d production from the Mishrif reservoir and 250,000 b/d from the Yamama formation, Luaibi said at the time.
The new target will require drilling new production and injection wells, building oil treatment, storage and transportation facilities, as well as facilities for gas treatment and power generation, Lukoil said in a statement.
"The experience acquired by the company in the region, the existing infrastructure and cost compensation within the project development from the current production will ensure maximum efficiency of the project implementation," the company said, giving no further details.
Lukoil holds a 75% stake in a consortium with Iraq's state North Oil Company developing the field in partnership with Basra Oil Company, formerly known as South Oil Company, under a 25-year service contract.
