Reuters cited oil ministry and industry sources as saying that oil major BP is close to reaching a deal with Iraq to cut the final production target for the supergiant Rumaila oilfield to between 1.8 million and 2.2 million barrels per day.
Officials from BP, Iraq's state run South Oil Company and its oil ministry have been in talks for the past four months, studying BP proposals to lower the target of 2.85 million barrel per day, which they agreed to in 2009.
The negotiations are the latest sign of trouble in Iraq's southern oilfields, where logistical bottlenecks and weak infrastructure have eroded investor interest at the same time that the autonomous Kurdistan region in the north attracts oil majors.
Soon after signing multi billion service contracts with foreign oil majors, Iraq said it aimed for an overall production capacity of 12 million barrel per day, but the Opec member has reduced that target to 8.5 million barrel per day to 9 million barrel per day.
A senior SOC official who is involved in the discussions said that "BP has submitted three figures to lower Rumaila production. Iraq has initially accepted to cut output, and a final deal is expected by year end."
The official said that "BP's offer included cutting Rumaila production to 1.8 million barrels per day and extending this final plateau until 2029."
A BP spokesman said that "We aim to discuss and agree a full field development plan in 2013. Any discussions we have with the government are commercially confidential."
Rumaila, the workhorse of Iraq's oil industry which BP operates with China's CNPC, has estimated reserves of 17 billion barrels and currently produces around 1.35 million barrel per day more than a third of Iraq's total output of 3.4 million barrel per day.
An oil ministry official said that "We have to re-negotiate the final production target not only with BP or Shell, but with other companies also. We don't have suitable infrastructure to deal with future mega production."
Officials added that a lower target suits Baghdad, because the government worries that adhering to existing agreements will result in large volumes of unused capacity and deplete more than half of its proven reserves over the life of the 20 year agreements.
