By Aref Mohammed
BASRA, Iraq, March 25 (Reuters) - Exxon Mobil has allocated $1.65 billion to develop Iraq's West Qurna 1 oilfield in 2013, up from $1.6 billion last year, the head of the joint management committee for the field said.
An Iraqi oil ministry official said the budget indicated Exxon's commitment to developing the southern field in 2013, which it offered to sell out of last year after riling Baghdad by signing six deals with the autonomous Kurdistan region.
Baghdad rejects contracts granted by the northern enclave as illegal and told Exxon it had to choose between the $50 billion West Qurna-1 project and its Kurdish assets, offering the U.S. major sweeter terms in a bid to keep in the south.
"Under the work programme approved for 2013 by the oil ministry, Exxon has set $1.65 billion to develop West Qurna 1," Madhi Abdul Razzaq of the management committee told Reuters.
In line with Iraq's service contract terms, oil companies must submit a work plan including development budget to the oil ministry before the start of the year for approval.
"If Exxon were not interested to keep working in West Qurna then it will not spend a huge investment of $1.65 billion to keep developing the field," the oil ministry official said on condition of anonymity because he was not authorised to speak to the media.
Indonesia's Chief Economic Minister said earlier this month the country's state-owned oil and gas firm Pertamina was in talks to buy 10-20 percent of Exxon stake in West Qurna-1.
Sources also said Exxon was considering selling part of its 60 percent stake in the field to PetroChina , the listed arm of China National Petroleum Corp (CNPC).
Production from West Qurna phase 1 is expected to reach 540,000 barrels of oil per day (bpd) in mid-2013 and 600,000 bpd by the end of the year, Abdul Razzaq said. The field is currently producing 480,000 bpd.
"Output from the field is planned to reach 900,000 barrels per day by 2015," Abdul Razzaq said, attributing the increased production to 36 newly drilled wells due to come onstream this year.
Exxon is also pushing ahead with plans to step up water-injection at the field to help raise extraction rates and maintain reservoir pressure to overcome declines in production at the fields.
"We have started water-injection operations in early 2012 with a capacity of 100,000 barrels of water per day, and for this year we will add additional capacity of 25,000 barrels of water," Razzaq said.
Italy's Saipem SpA was picked up by Exxon to build a $300 million water-injection project in the field with a capacity to inject 300,000 barrels of water daily and expected to be operational in 2016.