BP Agrees To Cut Spending On Iraq's Rumaila Field After Oil Price Drop

BP has cut its development budget for Iraq's giant Rumaila oilfield by $1 billion this year after the government warned a slump in crude prices and its battle against Islamic State was making it difficult to pay oil companies. The British oil major has agreed with Baghdad to reduce its 2015 spending on the country's largest oilfield to $2.5 billion, from the initially planned $3.5 billion, an industry source familiar with the matter said on Monday. International firms operate in Iraq's southern oilfields under service contracts, whereby they are paid a fixed dollar fee for volumes produced. But the arrangement has put Baghdad's coffers under immense strain, as a dramatic drop in crude prices since last summer has hammered the revenue it receives from selling oil. Oil companies have proposed millions of dollars of budget cuts, a senior Iraqi oil ministry official told Reuters in March. It came after the government - wary of a boost in production costs that would further stretch state finances - asked them to revise development plans by considering postponing new projects and delaying already committed undertakings. The oil ministry could not be immediately reached for comment on Monday. - See more at: http://www.rigzone.com/news/oil_gas/a/138646/BP_Agrees_To_Cut_Spending_On_Iraqs_Rumaila_Field_After_Oil_Price_Drop#sthash.p4pC1ecq.dpuf