Gazprom Neft Signs Contract to Develop the Badrah Oil Field in Iraq

Press-release

A contract to develop the Badrah oil field in Iraq has been signed today between Gazprom Neft Deputy General Director for Exploration and Production Boris Zilbermintz and the Government of Iraq.

The contract was signed following the results of the tender held on December 12, 2009 and won by a consortium led by JSC Gazprom Neft including also Korea’s Kogas, Malaysia’s Petronas and Turkish TPAO. As an operator, Gazprom Neft holds 30% in the project, Kogas 22.5%, Petronas 15%, TPAO 7.5%, while the Iraqi Government represented by an Iraqi Oil Exploration Company has a 25% stake in the project.

The project on the Badrah oil field development is scheduled for twenty years with a possibility of a five-year prolongation. The oil-rate plateau is expected to make about 170,000 bpd. The works are expected to be launched in 2010, and total project investments will reach about $2 bln.

Under the contract, following the achievement of 15,000 bpd of initial recovery, Gazprom Neft will be remunerated at the rate of USD 5.5 per a produced barrel of oil (or in the form of adequate volume of oil). The above figure is expected to be hit in late 2012 – early 2013, while getting to the production plateau oil rate is expected in 2016.

“Implementation of the project to develop the Badrah oil field is a key stage in the Company's development in the international markets. With the start of work in Iraq, Gazprom Neft is making yet another significant step in fulfilling its long-term plan of output expansion by 2020," Gazprom Neft Board Chairman Alexander Dyukov said.

The Badra oil field is located in Wassit province in the east of Iraq and is bounded by the Iranian Azar oil field projected for development by Gazprom Neft together with the Iranian NIOC. As initially estimated, original oil in place exceeds 2 bln. bbl.