) has set a capital budget of $2.85 billion for the development
of the giant Rumaila oilfield in Iraq in 2013. This marks a
nearly 30% increase from $2.2 billion allotted for Rumaila in
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BP plans to drill 300 new wells on the field over the next five
years. Per the 2013 development plan for Rumaila, BP intends to
issue three tenders for the drilling of 150 new oil wells in the
second half of 2013. Each tender will cover spudding of 50 wells.
Development of the Rumaila field is being carried out under two
levels. The existing program has boosted yield by about one-third
to nearly 1.35 million barrels per day (MMbpd). This is expected
to continue for the next three years and each year is likely to
witness an incremental increase of 100,000 bpd.
Currently, the BP-led consortium is finalizing plans for the
longer-term full field development, which will result in yield of
The project partners for Rumaila - BP and China National
Petroleum Corporation - had set the production goal of 2.85 MMbpd
of oil in an agreement with the Iraqi government. However, this
target is being reduced to 2 MMbpd, which is believed to be the
yield after the commissioning of new development projects.
The Rumaila oilfield has been a major strength of Iraq's oil
industry for decades. Rumaila is estimated to hold reserves of
about 17 billion barrels and currently produces the majority of
Iraq's total output of over 3 MMbpd.
Augmenting output from Rumaila, the most prolific oilfield of the
country, is crucial to the achievement of Iraq's aim of
increasing oil exports to 6 million barrels per day. Upgrade and
expansion of its equipment and facilities have become essential
to raise its output beyond 1.7 to 1.8 MMbpd.
In view of these, BP has called upon engineering companies to
construct a 300,000 bpd production facility, for which over 20
firms are competing. A decision is anticipated in early 2014.
BP carries a Zacks Rank #3 (Hold). However, there are other
stocks in the oil and gas industry like
Dawson Geophysical Company
Exterran Holdings, Inc.
) that appear more attractive in the short term. All three stocks
carry a Zacks Rank #1 (Strong Buy).