ExxonMobil‘s giant oil project in southern Iraq is reportedly on hold.
According to Reuters, a combination of contractual difficulties and security concerns is delaying agreement on the $53-billion Southern Iraq Integrated Project, which includes the construction of a water treatment plant needed to boost oil production. The deal would have seen Exxon get the rights to develope the Nahr Bin Umar and Artawi oilfields.
Last month, Oil Minister Thamer al-Ghadban criticised ExxonMobil‘s decision to temporarily evacuate staff from the West Qurna oil field following an attack in the area.
By Hamdi Malik for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.
ExxonMobilevacuated dozens of its non-Iraqi employees from Iraq on May 18. The evacuation follows a US State Department decision to withdraw its non-essential staff from the US Embassy in Baghdad and its consulate in Erbil, the capital of Iraqi Kurdistan.
The US oil company relocated its employees to Dubai, where they will continue their work related to the West Qurna-1 oil field in Basra. The company announced May 31 that it will begin returning its employees from June 2 after the Iraqi government promised to increase the security measures in the site.
At its regular meeting in Baghdad on Tuesday, the Iraqi Cabinet received a briefing on negotiations led by Iraq’s Ministry of Oil with ExxonMobil and PetroChina on the Southern Iraq Integrated Project.
In a statement, the government describes the project as “a mega energy and infrastructure scheme consisting of building oil pipelines, storage facilities and a seawater supply project to inject water from the Gulf into reservoirs to increase oil production and Iraq’s export capacity.”
According to Reuters, Iraq is close to signing the $53-billion, 30-year agreement, from which it expects to make $400 billion over the life of the project.
It quotes the Prime Minister as saying that it will involve increasing production at the Nahr Bin Umar and Artawi oilfields from around 125,000 barrels per day (bpd) now to 500,000 bpd.
Talks between ExxonMobil and Iraq on the multi-billion-dollar Common Seawater Supply Project (CSSP) have reportedly reached an impasse.
According to Reuters, two sides differ on contract terms and costs.
Ian Thom, principal analyst at consultancy Wood Mackenzie, told the news agency:
“The CSSP would be expensive and challenging but there’s opportunity here (for Exxon) … to get access to resources on a very large scale and to achieve something and really make a difference to its own business.”
The Basra Oil Company (BOC) is reportedly preparing to tender for a water injection project in Iraq if talks with ExxonMobiland PetroChina fail.
Reuters quotes the head of the Oil Ministry’s Petroleum Contracts and Licensing Directorate (PCLD), Abdul Mahdi al-Ameedi, as telling reporters at the CWC Iraq Petroleum Conference in Berlin, “we cannot wait for a longer time unless Exxon Mobil accepts the deal for the benefit of the two parties.”
He added that the delay in negotiations was partly related to initial production rates from the Nahr Bin Umar and Artawi oilfields.
(Source: Reuters )