BP Plc, which has a contract to develop Iraq's largest oil field with China National Petroleum Corp, expects the field to start output in 2012 or 2013, according to its chief economist Christof Ruhl.
But the companies and the Iraqi government are still negotiating details of the service contract, including the period and pace of development as well as the start date, Ruhl said in Shanghai yesterday.
Iraq awarded the contract to develop the Rumaila field to BP and CNPC at the end of last month, but rejected bids for other licenses in its first international tender for more than three decades.
The British firm and CNPC beat a bid from Exxon Mobil Corp and Malaysia's Petronas, after agreeing to charge US$2 a barrel to produce crude oil from the field after recovering costs. The BP consortium has proposed a fee of US$3.99 in its initial offer.
Some analysts have said the terms are not favorable, as a fixed charge means BP and CNPC could not benefit if oil prices soar. But Ruhl said the deal offered a unique opportunity to tap more of Iraq's reserves in the future and also is a major step to strengthen ties with Chinese companies.
"If we wouldn't make money we wouldn't do it, though it's not too much," Ruhl told Shanghai Daily on the sidelines of an event for the BP Statistical Review of World Energy 2009.