China's USD 225M Oil HBP Bags Service Project for Naft Khana Restoration in Iraq

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China Oil HBP Science and Technology, a provider of integrated solutions for oil and gas resource development and utilization, has signed a $225 million contract to restart production services at the Naft Khana oilfield in Iraq.

The company will deliver engineering, procurement, construction, operation, and maintenance services for the oilfield’s revival, announced yesterday by the Beijing-based firm, referencing a partnership with the project operator, NK Petroleum.

These services encompass inspection, assessment, and repairs of existing facilities, upgrading the central processing plant and surface installations at the site, as well as constructing a new gas processing unit and an auxiliary power facility.

The project aims for temporary acceptance within 18 months, after which a three-year period of operations and maintenance will follow once production resumes, the company stated.

This contract’s value accounts for approximately 61% of the company’s projected operating revenue for 2024. Its signing is expected to positively influence the firm’s financial performance, bolster its market position in the Middle East, and increase its market share and competitive edge, according to the company.

Historically, the Naft Khana oilfield is among Iraq’s earliest discovered, with a peak daily output of about 25,000 barrels. However, due to damages from conflict, security challenges, and underinvestment, production has been minimal since 2003, with complete suspension after 2023.

The project’s objective is to restore daily production to 15,000 barrels.

Shares of the company rose 2% to CNY 3.95 (roughly 56 cents USD) by 1:50 p.m. today, after an earlier increase of up to 8.9%. Meanwhile, the Shenzhen Component Index declined 1.3%.

NK Petroleum, registered in Hong Kong and a wholly owned subsidiary of Shanghai-listed Geo-Jade Petroleum, mainly invests in, and operates, upstream and downstream oil and gas projects. Shares of Geo-Jade Petroleum traded lower by 1.1% at CNY 9.07 (about $1.30 USD) during the same period.