Eni, Occidental Petroleum Corp., and Korea Gas Corp. (Kogas) have signed a technical service contract with Iraq's state-owned South Oil Co. (SOC) and Missan Oil Co. as State Partner, to redevelop the Zubair field, one of the largest discovered fields in the world, located near Basra in southern Iraq.

Over the next six years, the consortium, led by Eni (32.81%) with partners Oxy (23.44%), KOGAS (18.75%) and the Missan Oil Co. (25%), plans to increase production from the field to 1.2 million barrels of oil a day—an increase of more than 1 million barrels of oil per day. Once the target increase is reached, it is expected to be maintained for seven years thereafter.

By winning the rights to develop the field, the consortuim has agreed to invest roughly $1 billion a year in the project with total investment estimated to reach as high as $26 billion, according to Kogas.

The consortium will earn $2 per barrel on the incremental oil production once production has been raised by 10% from its current level of roughly 200,000 barrels of oil per day and will recover its expenditures through a cost recovery mechanism.

The Zubair Field Operating Division will manage the rehabilitation and expansion project, which will be staffed mainly by employees from South Oil Co.

“Our experience in similar environments, the financial and technological strength of our consortium and the deep knowledge of our partner SOC undoubtedly constitute the building blocks of a successful venture,” said Paolo Scaroni, CEO of Eni, Italy’s largest oil company. 

“Oxy is a very active and cooperative partner in many successful projects across the Middle East, and we expect similar success in Iraq,” said Dr. Ray R. Irani, chairman and CEO of Occidental Petroleum.

Choo Kangsoo, president and CEO of Korea Gas Corp. hopes that “through the development of Zubair project,” the company can contribute to the reconstruction and rehabilitation of Iraq, and play a role in “enhancing bilateral economic relationship between Iraq and Korea.”