BP says taking more oil from Iraq as payment

Mon Apr 20, 2015 8:58am EDT
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ABU DHABI (Reuters) - BP (BP.L: Quote) has been lifting more crude oil cargoes in the past couple of months as payment for its work in southern Iraq, and is comfortable with that level of shipments, a senior executive of the oil company said on Monday.

Low oil prices and the fight against Islamic State have forced Baghdad to delay billions of dollars of cash payments which it owes to international oil companies (IOCs), so they have been allowed to take oil shipments instead.

Michael Townshend, BP's president in the Middle East, ‎said current total production from Iraq's giant Rumaila field was about 1.4 million barrels per day and was expected to remain steady in 2015.

"In terms of the position we have on Rumaila, the payments have picked up and I'm comfortable where they are," he told reporters in Abu Dhabi.

"We get paid by liftings...either out of Ceyhan or out of the south...We certainly got more liftings in the last couple of months." He did not give details of the liftings.

BP has also extended an agreement with Iraq's Ministry of Oil to help arrest declining production at the huge northern Kirkuk oilfield, Townshend said. Kirkuk is currently disputed between the central government in Baghdad and Iraq's Kurdish region.

"We had a letter of intent, which was for a year, and we extended that until the end of this year because there was a time last year where we couldn't do anything productive."

Under the deal, BP works on the Baghdad-administered side of the border with the Kurdish region, on the Baba and Avana geological formations. Kirkuk's third formation, Khurmala, is controlled by the Kurdistan regional government.

BP, along with other IOCs, is in talks with Baghdad ‎over the technical service agreements under which they develop Iraq's southern fields. Investments in the fields are made by the foreign firms, which are then supposed to receive per-barrel fees.   Continued...

A BP logo is seen at a petrol station in London January 15, 2015. REUTERS/Luke MacGregor/Files