Is BP Eyeing the Door in Iraq?

Copyright © 2021 Energy Intelligence Group

• BP has set itself ambitious targets over this decade that will involve massive divestments, meaning its upstream assets will increasingly have to prove their competitiveness. • The UK major’s Rumaila oil field in Iraq, the country’s largest, has traditionally been seen as indispensable, offering economies of scale and ultra-low production costs. • But with the carbon intensity of projects coming under greater scrutiny, and the amount of investment required at Rumaila likely to rise, BP’s future there no longer looks inevitable. The Issue BP is transforming itself into a low-carbon company, cutting oil and gas production by 1 million barrels per day by 2030 and the carbon emissions associated with it by 35%-40%. So what part, if any, will Iraq play in these plans? The stringent terms of the country’s technical services contracts (TSCSs) mean that although Rumaila is a supergiant field, with a production capacity of more than 1.5 million b/d, BP only nets a couple of hundred thousand barrels per day from it. Another key feature of Iraq’s oil production is its carbon intensity, and the emissions caused by gas flaring at Rumaila hardly sit well with BP’s new environmentally progressive brand. Carbon-Intensive Barrels BP’s low-carbon energy strategy -- unveiled last August and which will see it focus on a smaller set of “resilient” hydrocarbon projects as it reduces in oil and gas output -- has set the clock ticking on many of the company’s operations around the world. Projects with low development and production costs are more likely to survive the cull. This should favor Rumaila, whose operating costs are less than $2 per barrel. But the new emphasis on projects with low greenhouse gas (GHG) emissions will not (EIF Sep.23'20). Iraq has for years ranked second on the World Bank’s gas flaring list of shame, after Russia, and the GHG intensity of its crude production is around three times that of Saudi Arabia and the UAE, according to the International Energy Agency. As the energy watchdog noted in a report on Iraq two years ago, consumers around the world are starting to pay attention to this issue. Detailed gas flaring information for Iraq’s fields is hard to come by. But data provided by FlareIntel show that around 4.5 billion cubic meters was flared at Rumaila last year -- just over a quarter of the 17.4 Bcm that Iraq flared in total, according to World Bank figures. Rumaila Oil Field: Key Stats Project partners BP (47.6%),

IOCs must execute credible medium-term transition strategies alongside conventional investments if they’re to get the green light from investors.
Tue, Oct 12, 2021
Equity investors are taking notice of 13-year-high gas prices as the market tightens and Haynesville producers are among the likeliest to benefit.
Fri, Oct 15, 2021
A key senate official has given a greenlight to a methane fee proposal for Democrats' spending bill.
Fri, Oct 15, 2021