Baghdad (IraqiNews.com) – British Petroleum (BP) and PetroChina have agreed to reduce the monthly budgets for two major oil projects at the Rumaila oilfield in southern Iraq.
The decision, made in collaboration with their Turkish contractor Tekfen, will ensure the continuation of the projects; however, it will significantly slow down the pace of activities. according to the British magazine Middle East Economic Digest (MEED).
A combination of regional geopolitical crises, operational obstacles, and Baghdad’s vigorous state-level austerity push are driving the spending reduction.
The total value of the impacted projects is less than $100 million. They entail building new facilities at the Rumaila oilfield in addition to modernizing and fixing vital upstream infrastructure that already exists.
Equipment import delays through the Strait of Hormuz, directly linked to the ongoing conflict in the Middle East, have significantly disrupted supply chains.
Due to temporary facility closures brought on by these delays, PetroChina’s foreign output has already decreased by over 14 percent.
The enormous Rumaila field is located just 60 kilometers from the Iranian border, making it extremely vulnerable to regional military conflict, according to industry sources.
To reduce state spending without lowering real raw output, the Iraqi Oil Ministry ordered a $1.4 billion cost-cutting directive for 2026 oil field budgets.
The remarkable 346 percent increase in Iraq’s budget deficit, which reached $23.9 billion during the first nine months of the year as a result of declining oil revenues, is the driving force behind this austerity.
