MEOG: Basra buying and Burgan on fire

This week’s MEOG looks at Basra Oil Co. (BOC’s) efforts to buy a major stake in one of Iraq’s biggest oilfields and the outbreak of a fire at the world’s second-largest onshore oilfield.

Following weeks of speculation, BOC submitted a formal request this week to acquire ExxonMobil’s 32.7% stake in the West Qurna-1 oilfield development project. Speaking to Reuters on May 10, the company’s director-general Khalid Hamza Abbas said: “A decision has been made and we sent a formal letter to ExxonMobil asking to buy its share.” He added that Exxon anticipates a return of $350mn for the stake, valuing the remaining nine years of the 20-year technical services contract (TSC) signed in 2010 at $1.07bn.

The developers are paid a maximum of just $1.9 per barrel of oil produced from the asset – less than $1.2 per barrel after deduction of taxes.

In Kuwait, state-owned Kuwait Oil Co. (KOC) said that production from the country’s key Great Burgan oilfield had not been affected despite the outbreak of a “limited” fire which injured two workers.

In a statement to Kuwait News Agency (Kuna), Qusai Al-Amer, the company’s spokesman and deputy CEO for administrative affairs, said that the workers who were contracted to one of KOC’s service providers were taken to Al-Ahmadi hospital to receive treatment.

He added that KOC’s firefighters and response teams controlled the fire, noting that it had “had no impact on oil production operations.” Al-Amer said that an investigation would be launched to determine the cause of the fire.

Greater Burgan is the world’s second-largest onshore oilfield and has remaining reserves of around 21bn barrels of oil and nearly 4 trillion cubic feet (113bn cubic metres) of gas, with production having begun in 1946.