China National Petroleum Corp (CNPC) and BP are expected to jointly finalize their contracts with Iraqi partners for the development of the Rumaila oilfield by the end of October, after the two companies were awarded the contract to develop the field in June.

CNPC President Jiang Jiemin was scheduled to travel to London this week to meet with BP's top management, said a company source yesterday, who asked not to be named. Development of the Rumaila oilfield will be on top of Jiang's agenda, he said, without elaborating.

The BP-CNPC contract to develop Rumaila was the only successful bid in Iraq's auction of its oil and gas assets in June. It is also the country's first auction of major oil contracts since the 2003 US-led invasion.

Insiders said yesterday that CNPC would renegotiate with BP on the size of their respective stakes in Rumaila during Jiang's visit.

Under a preliminary agreement, CNPC is set to take a 25-percent stake in the project, and BP 50 percent, with another 25 percent by their Iraqi partners. But CNPC would likely take a larger stake, a source close to the deal told Caijing magazine.

Rumaila is the workhorse of Iraq's oil sector, with a current capacity of 1.1 million barrels per day (bpd) out of Iraq's total national output of 2.4 million bpd.

Analysts said that the successful joint bid by BP and CNPC to develop the Rumaila oilfield has offered unique opportunities for the Chinese company to tap crude reserves in Iraq, which boasts of the third-largest oil reserves in the world.

"We should make use of such an opportunity," said Han Xiaoping, a veteran energy analyst in Beijing.

The CNPC source said yesterday that Jiang would also tour BP's oil production facility in Scotland during the visit.

Analysts said both parties would discuss cooperation on oil refining facilities in China.

BP is now negotiating with domestic companies to build a joint-venture refinery, said Chen Liming, president of BP China in July.

An executive close to the matter said earlier that BP was working with China's oil majors PetroChina and Sinopec on the project, tapping three coastal cities.

The company was in talks with Sinopec on a refinery in Beihai, Guangxi Zhuang autonomous region or Zhanjiang in Guangdong province.

(China Daily August 5, 2009)