BASRA, Iraq, Jan 20 (Reuters) - Iraq has proposed that China National Petroleum Corp (CNPC) continue to ramp up production from the Halfaya oilfield on condition that the company accept deferred payments for its investment, an oil official said on Wednesday.
CNPC can proceed with plans to double output at Halfaya to 400,000 barrels per day, from 200,000 bpd now, if it agrees to be reimbursed when the additional oil is actually produced, Adnan Noshi, head of state-run Maysan Oil Co, told Reuters.
The Iraqi company oversees oilfields in the namesake province, south of Baghdad.
Iraq, OPEC's second-largest producer, wants foreign oil companies to cut spending as the nation seeks to narrow a budget gap caused by lower crude prices, Oil Minister Adel Abdul Mahdi said on Tuesday.
Service agreements with foreign oil companies are straining Iraq's budget as the government pays them a fixed fee for increasing production at ageing fields when its own revenue is dropping with falling oil prices. Iraq also pays the cost of infrastructure investment by the companies.
Iraq generates 95 percent of its public budget from oil sales. It has service agreements with companies including CNPC, BP , Shell, Eni , Exxon Mobil and Lukoil , which get paid for the extra barrels of crude produced at fields awarded to them through a bidding process.
Noshi denied Iraqi media reports that Halfaya may close because crude extraction costs there are becoming uneconomical at current oil prices below $30 a barrel. He said the cost of extraction at Halfaya is $15 per barrel.
(Reporting by Aref Mohammed and Ahmed Rasheed; Writing by Maher Chmaytelli; Editing by Dale Hudson) ((maher.chmaytelli@thomsonreuters.com; +9647901917030;))
CNPC can proceed with plans to double output at Halfaya to 400,000 barrels per day, from 200,000 bpd now, if it agrees to be reimbursed when the additional oil is actually produced, Adnan Noshi, head of state-run Maysan Oil Co, told Reuters.
The Iraqi company oversees oilfields in the namesake province, south of Baghdad.
Iraq, OPEC's second-largest producer, wants foreign oil companies to cut spending as the nation seeks to narrow a budget gap caused by lower crude prices, Oil Minister Adel Abdul Mahdi said on Tuesday.
Service agreements with foreign oil companies are straining Iraq's budget as the government pays them a fixed fee for increasing production at ageing fields when its own revenue is dropping with falling oil prices. Iraq also pays the cost of infrastructure investment by the companies.
Iraq generates 95 percent of its public budget from oil sales. It has service agreements with companies including CNPC, BP , Shell, Eni , Exxon Mobil and Lukoil , which get paid for the extra barrels of crude produced at fields awarded to them through a bidding process.
Noshi denied Iraqi media reports that Halfaya may close because crude extraction costs there are becoming uneconomical at current oil prices below $30 a barrel. He said the cost of extraction at Halfaya is $15 per barrel.
(Reporting by Aref Mohammed and Ahmed Rasheed; Writing by Maher Chmaytelli; Editing by Dale Hudson) ((maher.chmaytelli@thomsonreuters.com; +9647901917030;))
