Jordan cabinet approves deal with BP for Risheh gas field

Amman (Platts)--29Dec2009/211 pm

Jordan's Council of Ministers late Tuesday endorsed an agreement betweenthe government's National Petroleum Company and BP for the development of theRisheh field, a major natural gas field on the border with Iraq.
With the absence of a lower house of parliament, which was dissolved by aroyal decree late in November, the cabinet's approval means BP can immediatelystart working on the project. If parliament had been in session, itsendorsement of the agreement would have been required.
Current production of the Risheh field stands at 22,000 Mcf/d, Mahmoud AlEis, spokesman for the Ministry of Energy and Natural Resources, told Platts.Jordan's overall daily needs of energy are estimated at about 500,000 Mcf/d.
NPC estimates reserves at Risheh at 3.7 Tcf, but BP's estimates are three times higher.
"BP's preliminary studies showed that the potential production could beanywhere between 330,000 Mcf/d to 1 Bcf/d," Al Eis said.
Under the agreement, BP will do research, exploration and will study howto best market the natural gas, which it will do inside and outside Jordan.Half the financial returns will go to the government.
According to the deal, Jordan will get all the gas produced in the first phase up to 50,000 Mcf/d.
BP will spend a minimum of $237 million in the first phase over three to four years on reprocessing the existing seismic surveys. The company will also be required to dig five new fields and upgrade existing rigs, all whileproviding Jordan with its technical support.
Details on phase two will be announced after completion of the firstphase, Al Eis said.
If the first phase shows tangible results, BP will move to phase two, inwhich the company would spent between $3 billion and $10 billion. In the second phase, BP would sell the gas produced on the international market. Half the proceeds of the second phase will go the government, and 40% to 49% will be shared by BP and NPC, according to the agreement.
Al Eis said the percentage for the NPC ranges between 1%-9% depending on production; the higher production is, the higher NPC's share would be. --Oula Farawati, newsdesk@platts.com --Platts Global Alert--

Tuesday, 29 December 2009 14:11:38