An initial agreement of great significance had been made last Thursday. One side is China National Petroleum Corp (CNPC), ranking first in China’s oil and gas production and Britain’s oil power, BP. The other side is Iraq’s Oil Ministry. They signed to develop Rumaila, Iraq’s largest oilfield.

Asim Jihad, Iraq’s Oil Ministry spokesman said that the signed contract should wait for the approval of the cabinet. Then, the ministry would fix the signing day.

According to Asim’s speech, the deal requires an investment of more that $15 billion. The State-run South Oil Company will represent the ministry to sign the agreement together with CNPC and BP.

A BP spokesman confirmed the statement that the contract was waiting approval from the Iraqi government after the initial treaty had been made.

He regarded it as a significant milestone. On behalf of BP, he said that he would like to sign the final agreement before the end of the year. CNPC had not prepared well to make comment.

Until BP and CNPC had cut their proposed remuneration fee to $2 per barrel, they finally won the Rumaila deal. In its June auction, Irap offered eight contracts in total.

Rumaila is the largest producing oilfield in Irap, with almost half of the country’s total output of 2.4 million barrels per day (BPD), 1.1 million BPD currently. It is estimated that the field’s reserves can be as much as 17 billion barrels.

Over the 20-year contract, BP and CNPC set their goal to facilitate their output to 2.85 million barrels a day.

In regard to the service contract, BP holds a 38 percent stake in the Rumaila venture, with CNPC 37 percent and Iraq’s State Oil Marketing Organization 25 percent.

The contract of Rumaila aims at injecting foreign cash to overhaul dilapidated facilities and outdated practices.

The recent report by the Chinese Academy of Social Sciences shows that the overseas expansion accords with China’s increasing oil imports. As over 60 percent of China’s oil consumption will be met by imports in 2020, said by analysts.

Lin Boqiang, director of China Energy Economic Research Center at Xiamen University said that as they need international giant partners to reduce the risks, the cooperative module benefits oil companies a lot.” Domestic oil companies speed up their pace to expand overseas market. Anyhow, in the aspect of international operations, they have really poor experience.

Lin also said that in the latter stages of oilfield exploitation, there would be more business opportunities. So the most significant part of the deal was to enter the international market and achieve as much experience as possible.

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BP, China, CNPC, economy, Iraqi, oilfield, Rumaila