Iraq Asks BP To Alter Rumaila Field Signature Bonus

(This item was originally published Thursday.) By Hassan Hafidh Of DOW JONES NEWSWIRES BAGHDAD (Dow Jones)--The Iraqi oil ministry has asked BP PLC (BP) and its partner China National Petroleum Corp., or CNPC, to change the signature bonus for the Rumaila oil field to unrecoverable but at a reduced sum from the proposed recoverable soft loan, a senior Iraqi oil official said Thursday. Iraq has set a recoverable five-year soft loan of $500 million for the super-giant Rumaila oil field in southern Iraq to be paid by BP and CNPC. Sabah Abdulkadhem al-Saaidi said the ministry asked them instead to pay an unrecoverable $100 million signature bonus. "We are still in discussions with them," Saaidi told Dow Jones Newswires. Saaidi said that the $500 million unrecoverable soft loan needs an approval from the Iraqi parliament, which hasn't yet sat following the country's March 7 general elections. A BP executive based in Iraq refused to comment. Three Iraqi oil fields--Rumaila, West Qurna Phase 1 and Zubair--were listed in the first licensing auction, Iraq's first major competitive energy tender in decades and one of the biggest in history, in June 2009. In the eight oil deals that Iraq awarded to international oil companies during the second post-war bidding round in December 2009, the government set signature bonuses ranging between $100 million and $150 million in accordance with the size of the field. When asked why the ministry decided to alter these loans to signature bonuses for the fields in the first bidding round, Saaidi said: "When we set the recoverable loans earlier last year, oil prices were very low--hovering around $38 a barrel--and Iraq was in dire need of cash. Now oil prices are much higher and Iraq earns more money from its oil sales. So Iraq is now in a better situation." Iraq, which sits atop the world's third-largest oil reserves, has signed 11 major oil deals with the aim of boosting its production to 12 million barrels a day in six to seven years' time, up from 2.4 million barrels a day. -By Hassan Hafidh, Dow Jones Newswires; +962 799 831 831; hassan.hafidh@dowjones.com (END) Dow Jones Newswires July 24, 2010 03:02 ET (07:02 GMT)