Gazprom Neft receives first batch of Iraq oil
Gazprom Neft, the operator of the Badra field development project, has received the first batch of Kirkuk grade oil from the Iraqi government, the Company says in its press release. The crude oil has been given to the company in compensation for its investment in the field development. 500 thousand barrels (about 70 thousand tonnes) of oil was delivered in the first batch from SOMO (State Oil Marketing Company), the Iraq state corporation, in the Turkish port of Ceyhan. Gazprom Neft’s buyer is a large Asian company, and the crude oil is being delivered on FOB* terms.
At the end of November 2014 the basic condition of the contract for development on the Badra field was fulfilled: within 90 days of commissioning, oil was being delivered into the main pipeline at a rate of at least 15 thousand barrels per day. Stable production at this level has enabled the investors to start receiving compensation for the costs incurred, by obtaining part of the oil produced on the field. Crude oil should be transferred to members of the consortium on a quarterly basis, and each member should sell on its share of oil independently.
Commercial oil shipment from Badra began in August 2014. Prior to this, the entire infrastructure required for production and transportation of crude oil was established at the field over a period of just three years. Three wells are currently operating on Badra and three more are being drilled. Production at the field is 15-17 thousand barrels per day.
The Badra field is located in the Wasit province in east Iraq. According to preliminary estimates, Badra’s geological reserves amount to 3 billion barrels of oil. The development project is scheduled to last 20 years with a possible 5-year extension. Under the terms of the contract, investors will be reimbursed for costs incurred and paid a fee of $5.5 per barrel of oil produced. The contract was signed in January 2010 by a consortium of companies consisting of Gazprom Neft (the operator), Kogas (Korea), Petronas (Malaysia) and ТРАО (Turkey). Gazprom Neft's stake in the project is 30%, Kogas – 22.5%, Petronas - 15%, ТРАО – 7.5%. The share of the Iraqi government, which is represented in the project by the Iraq Oil Exploration Company (OEC), is 25%.
