British oil giant BP Plc ( BP - Analyst Report ) awarded a contract to a joint venture run by Petrofac Limited and China Petroleum Engineering & Construction Corporation (CPECC).

The three-year contract − that came into effect at the start of this month − covers inspection, maintenance and repair works of degassing stations, rotating machinery and cluster pumping stations at the Rumaila oil field in Southern Iraq. The deal is worth $229 million to the joint venture, with Petrofac receiving approximately $160 million.

In 2009, a consortium comprising BP with operational interest of 38%, China's state-owned CNPC (37%) and Iraq's State Oil Marketing Organization (25%) clinched a 20-year development contract for Rumaila. The group set a target to increase output to 2.85 million barrels per day (MMbpd) in six years through a $15 billion investment in cash. Later, the consortium set up an operating company with Iraq's South Oil Company.

Located in southern Iraq, approximately 32 kilometers from the Kuwaiti border, the Rumaila oil field has an estimated crude reserve of 17 billion barrels. BP has already initiated steps for further development and the oil field averaged 1.35 million barrels of oil per day in August 2012.

BP’s endeavor to overcome the oil spill related losses in the Gulf of Mexico appears on track. The company expects higher sequential production in the fourth quarter following the completion of the summer maintenance season. Major project start-ups are also expected to do well. BP is reshuffling its portfolio to effectively turn into a high-reward exploration and production company.

In recent times, BP has divested a number of non-strategic assets that include Gulf of Mexico (GoM) oil and gas assets to Plains Exploration & Production Co. ( PXP - Analyst Report ) for $5.55 billion as well as its Canadian natural gas liquids business to Houston's Plains All American Pipeline LP ( PAA - Analyst Report ) for $1.67 billion.

Again, the U.K. major expects to generate growth through investment in new upstream projects that carry higher margins. It will likely focus more on its strong existing positions and its key operating strengths.

BP carries a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. We also maintain our long-term Neutral recommendation on the company.