* BP submission of field development plan overview imminent
* Still significant grey areas in the contract
(Adds quote, contract meeting, local province background)
By Simon Webb and Tom Bergin
DUBAI/LONDON, July 22 (Reuters) - An August deadline for BP to sign a deal with Iraq to develop the country's largest producing oilfield looks optimistic, but the company is sanguine the contract will proceed, a BP source said on Wednesday.
A BP-led consortium including China's CNPC won the right to develop the field at an oil and gas field auction last month in Baghdad. The auction was the first opportunity since the U.S.-led invasion in 2003 for foreign firms to compete for deals to work on the world's third-largest oil reserves.
"An August signing always looked tight," the BP source said. Executives from other companies competing for contracts in Iraq said the model contract for the deals needed a lot of clarification before BP or any other company would sign it.
The consortium was close to submitting to Iraq an overview of its plan to redevelop and boost production from the giant Rumaila oilfield, the BP source said.
Last week, BP requested an extension of a week to the July 15 deadline for the plan's submission, an oil industry source said.
BP and CNPC executives were in Baghdad on Wednesday to discuss work at Rumaila with Oil Minister Hussain al-Shahristani, the oil ministry spokesman said.
"Representatives of the two firms answered questions from the Oil Ministry officials about developing Rumaila oilfield," spokesman Asim Jihad told Reuters.
NEEDS CLARIFICATION
Under bidding terms, the contract was due for signing in August. But the draft contract would need extensive work before BP committed billions of dollars of risky investment, the oil firm executives said.
Several companies sent a list of their concerns to the oil ministry ahead of the bidding round detailing what they saw as issues that needed to be resolved before signing, should they win contracts, executives said.
"A huge amount of the contract was based on trust," said one senior oil executive at another international oil firm. "Companies don't like this at all, especially when there is high risk and you are committing billions of dollars."
The issues have long dogged Iraq's attempts to attract foreign investment in its battered oil industry, performing well below its potential after years of sanctions and war.
Among them are security, method of payment, ratification of contracts, Iraq's fiscal stability and how foreign firms would cooperate with the local unit of Iraq's state oil firms.
Iraq's oil ministry has said there is no need for parliament to ratify contracts with foreign oil firms. But a top parliamentarian said this week the legislative body has the power to block the deals.
Oil firms have also expressed concern that local or future central governments may levy taxes on the contracts or change the agreed terms.
Two more provinces were pushing for greater influence over energy contracts, adding themselves to a list that already includes the semi-autonomous northern Kurdish region.
A bitter feud between Baghdad and the Kurdish region over control of energy resources has delayed a federal oil law for years.
BP's was the only contract awarded of eight that Iraq offered to international energy companies, after the country demanded bidders accept much lower payment for work than most participating companies were prepared to accept.
BP and CNPC cut their bid terms to remuneration of $2 per barrel from their initial target of nearly $4 to secure the contract. (Additional reporting by Waleed Ibrahim in Baghdad; editing by James Jukwey)
* Still significant grey areas in the contract
(Adds quote, contract meeting, local province background)
By Simon Webb and Tom Bergin
DUBAI/LONDON, July 22 (Reuters) - An August deadline for BP to sign a deal with Iraq to develop the country's largest producing oilfield looks optimistic, but the company is sanguine the contract will proceed, a BP source said on Wednesday.
A BP-led consortium including China's CNPC won the right to develop the field at an oil and gas field auction last month in Baghdad. The auction was the first opportunity since the U.S.-led invasion in 2003 for foreign firms to compete for deals to work on the world's third-largest oil reserves.
"An August signing always looked tight," the BP source said. Executives from other companies competing for contracts in Iraq said the model contract for the deals needed a lot of clarification before BP or any other company would sign it.
The consortium was close to submitting to Iraq an overview of its plan to redevelop and boost production from the giant Rumaila oilfield, the BP source said.
Last week, BP requested an extension of a week to the July 15 deadline for the plan's submission, an oil industry source said.
BP and CNPC executives were in Baghdad on Wednesday to discuss work at Rumaila with Oil Minister Hussain al-Shahristani, the oil ministry spokesman said.
"Representatives of the two firms answered questions from the Oil Ministry officials about developing Rumaila oilfield," spokesman Asim Jihad told Reuters.
NEEDS CLARIFICATION
Under bidding terms, the contract was due for signing in August. But the draft contract would need extensive work before BP committed billions of dollars of risky investment, the oil firm executives said.
Several companies sent a list of their concerns to the oil ministry ahead of the bidding round detailing what they saw as issues that needed to be resolved before signing, should they win contracts, executives said.
"A huge amount of the contract was based on trust," said one senior oil executive at another international oil firm. "Companies don't like this at all, especially when there is high risk and you are committing billions of dollars."
The issues have long dogged Iraq's attempts to attract foreign investment in its battered oil industry, performing well below its potential after years of sanctions and war.
Among them are security, method of payment, ratification of contracts, Iraq's fiscal stability and how foreign firms would cooperate with the local unit of Iraq's state oil firms.
Iraq's oil ministry has said there is no need for parliament to ratify contracts with foreign oil firms. But a top parliamentarian said this week the legislative body has the power to block the deals.
Oil firms have also expressed concern that local or future central governments may levy taxes on the contracts or change the agreed terms.
Two more provinces were pushing for greater influence over energy contracts, adding themselves to a list that already includes the semi-autonomous northern Kurdish region.
A bitter feud between Baghdad and the Kurdish region over control of energy resources has delayed a federal oil law for years.
BP's was the only contract awarded of eight that Iraq offered to international energy companies, after the country demanded bidders accept much lower payment for work than most participating companies were prepared to accept.
BP and CNPC cut their bid terms to remuneration of $2 per barrel from their initial target of nearly $4 to secure the contract. (Additional reporting by Waleed Ibrahim in Baghdad; editing by James Jukwey)