March 31, 2010 / 11:46 AM / in 8 years

UPDATE 1-Iraq awards Rumaila drilling deals worth $500 mln

* Iraq awards nearly $500 million new contracts for Rumaila

* Iraq awards total of 49 drilling contracts out of 56

(Adds details and background)

KUWAIT, March 31 (Reuters) - Iraq, along with oil major BP Plc (BP.L) and its Chinese partner CNPC, has awarded nearly $500 million worth of new drilling contracts for the giant Rumaila oilfield, a government official said on Wednesday.

Iraq awarded contracts to drill 49 new wells each valued at around $10 million, Abdul-Mahdy al-Ameedi, director of the Oil Ministry’s licensing office, told Reuters.

Chinese firm Daqing and a joint venture between Schlumberger Ltd (SLB.N) and the state-owned Iraq Drilling Company are each being awarded contracts to drill 21 new wells, while Weatherford International Ltd (WFT.N) was awarded seven new wells, Ameedi said.

There were originally 56 new wells available, he said.

“The remaining seven wells we have left for later, once we review the performance of the contractors,” he said.

Iraq, in desperate need of cash to rebuild its economy after years of war and sanctions, has struck development contracts with global oil majors that could also signal a bonanza for international oil service companies.

    Rumaila, with 17 billion barrels in estimated crude reserves, is the workhorse of Iraq’s oil industry, producing almost half its total output of 2.5 million barrels per day.

    The field’s reserves alone are bigger than those of the whole of Algeria, a fellow member of the Organization of the Petroleum Exporting Countries (OPEC)

    BP and its Chinese partner expect to increase Rumaila’s output to 2.85 million bpd.

    The two companies signed a 20-year development contract last year for Rumaila.

    Earlier this year the head of State Oil Marketing Organisation (SOMO) said Rumaila could start pumping an additional 100,000 bpd of crude from Rumaila by the beginning of July. [ID:nLDE60TO8E] (Reporting by Rania el-Gamal; editing by Anthony Barker)

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