Gazprom Neft Raises Spending Plan to $4 Billion at BadraStephen Bierman and Elena Mazneva
OAO Gazprom, Russia’s natural-gas exporter, said the portion of total capital expenditure by its oil arm Gazprom Neft to develop the Iraqi Badra field would reach $4 billion, about double the original estimate.
The increase is partly because the field needs more wells to meet output targets after initial exploration revealed more complex geology than expected, Gazprom Neft’s press service said by e-mail. The other reason is the original cost estimate didn’t include all spending categories, the company said.
Iraq’s central government awarded an investor group led by Gazprom Neft and including Korea Gas Corp., Petroliam Nasional Bhd and Turkiye Petrolleri AO the operating contract to develop the Badra oil field in 2009. Gazprom Neft is seeking to boost oil and gas output to 100 million metric tons annually by 2020 from 62.3 million tons last year.
The Iraqi government is allowing the group to recoup initial investments, awarding a fee of $5.50 a barrel produced over the 20-year span of the contract.
Gazprom Neft, which started production in May, plans to reach output of 170,000 barrels a day in 2018, slightly later than the previous 2017 target, according to a bond prospectus from Gazprom.