Occidental Petroleum and partners to develop massive Iraqi oil field

Occidental Petroleum Corp. said Friday that it and two major partners — Italian energy conglomerate Eni and Korea Gas Corp. — had signed a technical service contract to develop the massive 4-billion-barrel Zubair oil field in Iraq.

Analysts offered differing opinions on the significance of the deal for Occidental, Iraq and the overall price of oil on the world market. There was agreement only on the sense that this was a good deal for Westwood-based Occidental, strengthening its status as a Middle East player with terms that seemed to limit its exposure to potential problems.
The investment group will spend about $20 billion over the life of the 20-year contract and will earn about $2 a barrel once production is in full swing, the companies said.

“It’s a great agreement for Occidental, with the caution that no one should be betting on smooth sailing in Iraq. There will be quite a few bumps in the road,” said James Di Georgia, publisher of the Gold and Energy Advisor investment newsletter and author of “The Global War for Oil.”

The consortium plans to ramp up the Zubair field’s production to 1.2 million barrels a day within six years from current production of about 200,000 barrels a day.

Los Angeles Times