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Negotiations with Exxon for Basra mega-project still on, says Iraqi oil ministry

Negotiations with Exxon for Basra mega-project still on, says Iraqi oil ministry


Iraq is not ruling out US oil major Exxon Mobil from participating in a $53 billion (Dh194bn) 30-year mega project to develop the country’s southern energy infrastructure, the oil ministry said on Saturday.

“The ministry affirms that its negotiations with US company ExxonMobil are ongoing,” its statement read.

Not reaching an agreement or signing a deal with the US major did not mean the end of negotiations or the “exclusion” of Exxon Mobil, it added.

The clarification follows reporting by Reuters, citing five Iraqi oil officials, that the ministry had reached an agreement with BP and Italian energy firm Eni to develop a $400 million scheme to build two seabed pipelines. The scheme, which is part of a larger $53bn plan proposed by Exxon, was the focus of its work in Iraq.

However, Exxon’s development of its scheme was impeded by wrangling over contracts as well as concerns over security, which in May forced evacuation of its staff from Iraq.

In May Iraq's oil minister, Thamir Ghadhban, called Exxon’s pull-out of its staff “unacceptable and unjustified”, urging the major to return its staff to work.

The following month Exxon undertook another evacuation of its foreign staff after a rocket exploded near a camp for its field workers.

Exxon Mobil is the lead contractor in West Qurna, one of Iraq’s largest oil fields, west of the southern province of Basra.

Both incidents came amid escalating tensions in the Gulf between the US and Iran after tankers transiting the congested Strait of Hormuz came under attack. The US blamed Iran for the attacks. Iraq, Opec’s second-largest producer has been looking to boost its export capabilities, particularly from its southern fields.

In June, Iraq awarded South Korea’s Hyundai Engineering and Construction a $2.4bn contract for a sea water injection facility, which was initially under discussion with Exxon Mobil.

Iraqi officials who spoke to Reuters on the condition of anonymity said the delays had an impact on the decision to award Exxon contracts for the southern export infrastructure.

“We can’t wait for Exxon forever. We have serious problems with our sea pipelines and urgently need to find partners to help build new ones. Further delays could harm our sea export infrastructure,” an official told the news agency.

One of the two seabed pipelines, on which Eni and BP will reportedly work was shut in 2017 following leakages. The other pipeline has been operating in partial capacity.

According to the proposed deal, BP would assume control of the project’s finance, while Eni would handle procurement, engineering and construction.

BP would accept payment in oil cargoes while Eni will be paid in cash work its work, according to the officials.

Related Links: ExxonMobil, BP, Eni

Source: The National

Published: 11-08-2019

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