BAGHDAD: ExxonMobil has informed the Iraqi government it wants to pull out of a $50bn oil project, and Baghdad expelled Turkey’s state oil operator from another contract yesterday, both signals of trouble in Iraq’s petroleum policy.
“ExxonMobil has stated in its letter that it has started discussions with some international oil companies to sell its stake,” Abdul-Mahdy Al Ameedi, director of Iraq’s contracts directorate, told reporters. The move by ExxonMobil to quit the West Qurna-1 oilfield in south Iraq will exacerbate tensions between Baghdad and the autonomous Iraqi Kurdistan region, where Exxon has signed oil deals seen as more lucrative but dismissed by the central government as illegal.
Kurdistan has upset Baghdad by signing oil deals with foreign companies including ExxonMobil, Chevron and Total. Kurdish officials say they have the constitutional right to do so, but the central government says only it controls oil policy.
Iraq’s cabinet also said it was expelling Turkey’s state-owned TPAO from its exploration block 9 oilfield for an unspecified reason, denying it was prompted by any move by the Turkish company into Kurdistan.
Baghdad plans to reply to the letter from ExxonMobil by Sunday, another oil official said. But it was unclear who would replace ExxonMobil if it leaves the huge oilfield, which pumps around 400,000 barrels per day of crude, with minority partner Royal Dutch Shell. ExxonMobil has not commented publicly on its plans.
Doubts about who can replace Exxon in the important project could raise questions about Iraq’s target to increase crude output to 5-6 million barrels per day by 2015 from 3.4m b/d.
Some industry sources have said Baghdad is keen to replace ExxonMobil with companies from Russia or China as a way to hit back at major Western oil majors. But it was unclear which companies would have the financial heft to follow ExxonMobil.
Russia’s Lukoil and Gazprom Neft are already working in Iraq. Lukoil, which already runs a project to develop West Qurna-2, has said that it lacks the resources to take on a project like West Qurna-1 for the moment.
ExxonMobil is now at the heart of a long-running dispute over oil reserves and territory between the Arab-led central government and ethnic Kurds, who have run their own regional administration in northern Iraq since 1991.
Iraq’s cabinet also decided to expel Turkey’s TPAO from Block 9, where it holds a 30 percent stake, and asked Kuwait Energy to boost its stake to 70 percent from 40 percent. Dragon Oil holds the remaining 30 percent.
“We respect their decision. If they see such a contract renewal or stake transfer appropriate, we don’t mind either,” Turkish Energy Minister Taner Yildiz told reporters, in response to Iraq’s plan. Iraqi officials said the decision was not related to possible TPAO deals with Kurdistan.
“The cabinet rejected the approval of Turkey’s TPAO as a partner,” Al-Ameedi said. “Removing TPAO has no connection with Kurdistan deals. We know TPAO has no deals in Kurdistan. But this decision was taken for other reasons.” He refused to give any further details.
Reuters
