Gazprom Neft, the operator of the Badra oil field in Iraq, announces that first oil from the field is now being delivered to Iraq’s main pipeline system for transfer to the export terminal in Basra (Persian Gulf). Current deliveries from Badra to the pipeline stand at over 15,000 barrels of oil per day and this level should be maintained until the end of 2014. According to the service contract with the Government of Iraq, the consortium of investor companies will begin receiving a share of the oil produced at the field after a period of 90 days following launch of commercial supply.
All of the oil produced in southern Iraq, including at Badra, is Basrah Light oil. The Iraqi State Oil Marketing Organization (SOMO) is responsible for oil sales and each quarter will be delivering a share of oil to the investor companies to reimburse their initial project costs. Once these project costs have been covered, the investor companies will receive remuneration in kind for ongoing development at the rate of $5.5 of oil per barrel produced. Each investor company will be selling their share of oil independently.
First oil from the Badra field was produced in December 2013. Final commissioning at the field and testing of production and transportation infrastructure began in May 2014. Two wells are currently in production at the field and a further three wells are being drilled under a contract with the Chinese company ZPEC. According to the service contract production at the field will achieve 170,000 barrels of oil per day.
Alexander Dyukov, Chairman of the Management Board of Gazprom Neft, said:
"Over the period of just a few years, a consortium of companies led by Gazprom Neft has fully prepared Badra, one of the most complex geological field structures in Iraq, for full-scale commercial development. This is the first major international project in upstream the company has implemented from scratch. The unique experience gained during this project will contribute to our development of future projects both in Russia and internationally".
The Badra oil field is located in Wasit Province in Eastern Iraq. According to preliminary estimates, geologic reserves at the Badra field amount to 3 billion barrels of oil.
The Badra oil field 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 equivalent of $5.5 per barrel of oil produced.
The contract with the Iraqi government for development of the oil field was signed in January 2010 upon completion of a bid process in December 2009. The winning bid was submitted by a consortium of companies consisting of Gazprom Neft, KOGAS (Korea), PETRONAS (Malaysia), and TPAO (Turkey). Gazprom Neft is the project operator.
Gazprom Neft’s share in the project is 30 percent, while KOGAS has 22.5 percent, PETRONAS has 15 percent, and TPAO has 7.5 percent. The share of the Iraqi government, represented in the project by the Iraqi Oil Exploration Company (OEC), is 25 percent.
New infrastructure has been built at the field to enable full-scale development including the first stage of the central gathering point (CGP) with a capacity of 60,000 barrels per day. The CGP’s capacity will eventually be increased threefold. In spring 2014 a 165 kilometer pipeline connecting the oilfield with Iraq’s major pipeline system was brought into operation. The company has launched construction of a gas processing complex with a capacity of 1.5 billion cubic metres per year, and work is continuing on laying a 100 kilometer pipeline connecting the Badra field with the Zubaida power plant (Wasit Province).
A major focus on social projects addresses the school education system, medicine and electricity in the Wasit Province and the city of Badra. Annual social investment in the region has increased to $5 million starting from 2014.
- Exploration and production photo gallery