Monday, May 17, 2010

(Adds shares of each company, Cnooc statement, background.) 


 
   By Hassan Hafidh 
   Of DOW JONES NEWSWIRES

Cnooc Ltd. (CEO), the Hong Kong-listed unit of China National Offshore Oil Corp., and state-run Turkish Petroleum Corp., known as TPAO, clinched Monday a final deal to develop the prized 2.5-billion-barrel Missan oil-field complex in southern Iraq, ministry officials said.

The signing ceremony took place at the Iraqi Oil Ministry headquarters in Baghdad in the presence of Oil Minister Hussein al-Shahristani and company executives.

China's Sinochem International Corp. (600500.SH) was originally partnered with Cnooc in an unsuccessful bid for the Missan fields during Iraq's first licensing auction last year. But it decided to withdraw from the consortium when Cnooc accepted the Iraqi government's remuneration fee of $2.30 a barrel. TPAO joined the consortium instead.

Cnooc will hold a 63.75% stake in the venture, TPAO will own 11.25% and state-run Iraqi Drilling Co. will hold the remaining 25%.

The two Chinese state-run firms initially offered a remuneration fee of $21.40 for each extra barrel of oil produced and suggested raising production from the fields to 450,000 barrels a day. They subsequently lowered the fee to $18.09 a barrel, but that was still much higher than Baghdad's proposed fee of $2.30 a barrel.

The Cnooc-TPAO alliance has set a production plateau target for the three oil fields--Fakka, Buzurgan and Abu Ghrab in Missan governorate in southern Iraq--at 450,000 barrels a day, to be reached in six years, compared with the current 100,000 barrels a day.

"Cnooc and its partner will carry out an investment plan on the development of Missan oil fields, to increase the production level for the benefits of all parties," Cnooc's Chairman and Chief Executive Fu Chengyu said in a statement. He didn't give an investment figure, however.

Missan is the 11th deal Iraq has signed with international companies since November in a bid to quadruple its crude oil production from 2.4 million barrels a day presently.

The Missan deal, which runs for 20 years and can be extended for a further five, makes Chinese oil companies the dominant foreign players in Iraq's promising oil sector. This year and last Chinese companies signed three big development deals, including the one for the supergiant Rumaila oil field in partnership with BP PLC (BP).

The Chinese were the only companies that bid last year for Missan, as others were discouraged from bidding because some of the fields are in a disputed area near the border with Iran.

In December, Iranian troops occupied an Iraqi well in the Fakka field bordering Iran, causing a row between the two countries. In February, the Iraq government said Iran withdrew its troops from the field but wanted negotiations to demarcate the borders.

-By Hassan Hafidh, Dow Jones Newswires; +962 799 831 831; hassan.hafidh@dowjones.com

(END) Dow Jones Newswires

17-05-10 1153GMT