Gazprom Neft, Iraq agree to changes in conditions of Badra project, but have yet to put it in writing
DUBAI. Sept 23 (Interfax) - Gazprom Neft and the authorities of Iraq have agreed on fundamental changes to the conditions of the development of the Badra field and all that is left to do is to put the agreement in writing, the Russian oil company's deputy CEO, Vadim Yakovlev told reporters on the sidelines of the SPE Annual Technical Conference in Dubai.
"We are now in constant dialog with the Iraqi authorities. And we believe that we have found understanding and fundamentally agreed on two issues. The first is updating the field development plan, including the production profile in line with geological particulars of the field. The second is the revision of the mechanism for compensation of expenses and this revision is aimed at accelerating recovery [of investment]. And it's important for us that these agreements be put in writing. We're patiently working on this," Yakovlev said.
He said that existing wells at Badra are now tapping about 50% of reserves and at the current stage of the project's development production has begun to decline.
"We believe that drilling at the project can and should continue. We're prepared to do this. The remaining reserves are more difficult, they require other technological solutions. But if we go step by step, then as the field is drilled it will be possible to talk about maintaining the plateau at a certain level," Yakovlev said.
Gazprom Neft has been holding negotiations with Iraq for a long time on changing the development plan for Badra, as well as discussing an addendum to the service contract on the project.
The Iraqi authorities earlier approved a new plan for developing Badra to stabilize production at 75,000 barrels per day. However, Gazprom Neft's production of oil and liquid hydrocarbons in Iraq and Kurdistan fell for the second consecutive year in 2020, dropping 21% to 1.2 million tonnes. Gas production in Badra fell 27.3% to 0.16 billion cubic meters. The company said earlier that Badra is seeing a natural decline in output.
The Badra field, which is located in the Wasit province in eastern Iraq, has estimated in-place reserves of 3 billion barrels of crude. The project to develop the field is intended to span 20 years, with the possibility for a five-year extension. The contract with the Iraqi government was signed in January 2010 by the consortium of Gazprom Neft (as operator), with a 30% stake in the project; South Korea's Kogas with 22.5%; Malaysia's Petronas with 15%; and Turkey's TPAO with 7.5%. The Iraqi government, which is represented by Oil Exploration Company, has a 25% stake.