Iraq sees $53b deal with ExxonMobil, PetroChina very soon

Published: May 8, 2019
Deal will allow Iraq to generate 750 million standard cubic feet of gas per year. PHOTO: REUTERS

Deal will allow Iraq to generate 750 million standard cubic feet of gas per year. PHOTO: REUTERS

BAGHDAD: Iraq Oil Minister Thamer Ghadhban said on Wednesday he expects his ministry to sign an initial deal with ExxonMobil and PetroChina “very soon”, but did not give a specific date.

“We have managed to take a step forward in resolving some lingering issues in the deal,” Ghadhban said at an oil ministry event.

Once the talks end, the initial deal will be studied by the ministerial energy committee before referring it to cabinet for approval, Ghadhban added.

Ghadhban said the deal with Exxon and PetroChina would allow Iraq to generate 750 million standard cubic feet of gas from the two oilfields per year.

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On Tuesday, Iraq’s Prime Minister Adel Abdul Mahdi said Iraq was close to signing a 30-year energy agreement with both companies, for $53 billion.

Iraq expects to make $400 billion over the 30 years the deal is in effect, the prime minister said.

The southern mega-project involves the development of the Nahr Bin Umar and Artawi oilfields and an increase in production from the two fields to 500,000 barrels per day (bpd) from around 125,000 bpd now, Abdul Mahdi said.

The project is crucial to supplying water to oilfields in the south in order to boost pressure and keep production steady.

Media reports had quoted Iran’s ambassador in London on Monday as saying the United States would grant waivers to Iraq allowing it to deal with Iran economically, in exchange for Baghdad signing an oil deal with Washington.

“Talks now between the oil ministry and ExxonMobil and PetroChina are focused on how to split profits if oil prices rise or decline,” Abdul Mahdi said in response to a Reuters’ question on the obstacles holding up a final agreement.

“The deal lasts for 30 years and such financial details are sensitive and should be given more discussions,” he added.

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Iraq is the second largest oil exporter in OPEC and has long-term aims to boost output curtailed by decades of war and sanctions. Such projects are among the most valuable prizes in the world for international oil companies. An initial agreement would be a big boost for ExxonMobil’s plans to expand in Iraq.

It is also one of the only countries in the world to have friendly relations with both the United States and Iran. Tehran and Washington, arch enemies elsewhere, are Baghdad’s main allies and vie for influence there.

ExxonMobil and PetroChina will build a water injection project to feed oil wells in the south, as well as rehabilitate and build new export pipelines, Abdul Mahdi said.

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