WRAP Iraqi Cabinet approves BP's offer on Rumaila oil field, oil deal expert

• published: 23 Jul 2015
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Baghdad, Iraq - 1 July 2009 1. Set-up shot of spokesman of Iraqi government Ali al-Dabbagh in his office 2. Close-up of Iraqi flag 3. SOUNDBITE (English) Ali al-Dabbagh, spokesman of the Iraqi government "Iraqi government decided to approve the offer being submitted by British Petroleum and CNPC, the Chinese company, which they had offered to increase the production to its peak, which is 2.85 (m) million barrels per day, from the current production which is 950,000 barrel per day, with remuneration fees of two (US) dollars per barrel, for the increment in the production. The Iraqi government as well decided not to accept the offers of the other companies, as they refused to reduce the remuneration fee from their prices, their quote to the prices, and to the quote which the minister of oil had decided." Rumaila oil field, south of Baghdad, Iraq - 28 June 2009 4. Various shots of refinery and workers at Rumaila oil field 5. Various shots of fire emanating from top of tower New York, United States - 1 July 2009 6. Wide of the New York Mercantile Exchange (NYMEX) 7. SOUNDBITE: (English) Ray Carbone, Paramount Options: "The worry is the nationalisation of oil assets, the reliability of the government in Iraq to honour agreements. We have seen this happen in Russia and we have seen it happen in other countries where much money is spent on the developmental side only to have that investment snuffed out by changing terms and I think that's what is being weighed here by all of the participants." 8. Medium close up of traders on NYMEX floor 9. SOUNDBITE (English) Ray Carbone, Paramount Options: "Well this fits a pattern that we have seen over the last five years of China being a very aggressive pursuer of energy assets. It does not surprise me in the least that China is a part of this deal. They have been expanding and growing rapidly in the third world in Africa especially and I am sure they would like to get into Iraq and this is a way for them to do it, spreading out some of the risk." 10. Wide of NYMEX floor STORYLINE: Iraq's government on Wednesday approved a BP-led consortium's offer to develop a giant oil field in the south, moving forward with the only deal struck during a much-hyped, but ultimately disappointing, international oil auction. Iraq, which is desperate for cash to fund its reconstruction efforts, had put six oil and two gas fields on offer on Tuesday to foreign firms in the country's first international oil licensing round in over three decades. But the auction - opposed from the start by many of the country's lawmakers - failed to elicit the kind of excitement or commitments Iraqi oil officials had anticipated. British giant BP and its Chinese consortium partner CNPC walked away from the auction with development rights for the 17.8 (b) billion barrel Rumaila field. But their win came only after they agreed to take less money for the oil they produced. Under the service contracts, the companies are paid a per barrel price for production over a minimum target level. BP and CNPC had bid 3.99 US dollars per barrel, but slashed their price to the two US dollars per barrel payment sought by the oil ministry. Their only rivals for the fields, a consortium led by US giant Exxon Mobil, refused to amend its offer of 4.80 US dollars per barrel on a target production of 3.1 (m) million barrels per day. The Cabinet of ministers signed off on the BP deal, government spokesman Ali al-Dabbagh said. The government did not say when the signing would take place. He billed it as the answer to Iraq's cash crunch, and the lacklustre showing could further embolden his critics. Carbone also said that China's involvement in the bidding process matches a pattern that has emerged in previous years. You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/8f1e3cce1c661b62ed0f4ac401969b69 Find out more about AP Archive: http://www.aparchive.com/HowWeWork