BP in Iraq's 1st big post-invasion oil deal

OTHER DEALS IN PIPELINE

Iraqi oil experts say they do not expect BP and CNPC to pump billions into Rumaila immediately, partly because of uncertainty over the outcome of parliamentary elections in January.

The contract allows them to start slow -- they must spend $300 million over the first 33 months and ramp up production by 10 percent initially.

That production increase can be easily achieved by repairs to the infrastructure and by going after "low-hanging fruit," said Mahmoud al-Jubouri, an oil expert with Iraq's South Oil Company, which has run Rumaila and will be BP's partner.

"They will try to reduce spending, fearing possible bad surprises in the future," he said.

Rumaila was the only one out of six oilfields and two gas fields on offer that was successfully auctioned off in Iraq's first tender of development contracts at the end of June. Other oil companies balked at Iraq's stiff terms.

But subsequent negotiations behind closed doors and the sweetening by Iraq of its taxation terms have since narrowed the differences between the oil ministry and the companies and several other contracts are expected to be finalised soon.

Among them is the 4-billion-barrel Zubair oilfield in the south. Italy's Eni, U.S. major Occidental Petroleum Corp and South Korea's KOGAS inked an initial deal over Zubair on Monday.

Another is the 9-billion-barrel West Qurna oilfield, and Iraq is also talking to Royal Dutch Shell about resubmitting a bid for the Kirkuk oilfield in the north.

The Rumaila, Zubair and West Qurna deals alone are expected to add 4.5 million barrels per day to Iraq's oil output capacity, roughly equal to 5 percent of global oil supply.