Page 4 - MEOG Week 32

MEOG Commentary MEOG
Iraq makes progress
on pipeline talks as
Exxon watches on
Despite years of talks, ExxonMobil and PetroChina are yet to sign a deal for the Integrated South Project, while Hyundai has already picked one up and BP and Eni are lined up for another
IraQ
What:
bP and Eni are rumoured to be closing in on a deal for export infrastructure in southern Iraq.
Why:
The deal follows Hyundai’s recent award to build a seawater supply line, much needed by the giant southern elds for increasing output.
What next:
For all the talk, ExxonMobil has still
not closed a deal for
the massive $53bn Integrated South Project, but pressure from the washington will likely keep it in the running.
REPoRTS emerged late last week that Iraq was nearing an agreement for BP and Eni to build subsea oil pipelines that are to be part of the wider Integrated South Project (ISP).
Five senior o cials were quoted by Reuters as saying that the proposed $400mn deal would see the two international oil companies (IoCs) manage the implementation of two seabed export lines connecting to the Al Başrah oil Terminal (ABoT) and the Khor al-Amaya oil Terminal (KAAoT). Sources said that loading at the latter had been shut in since a pipe rupture caused leaks in 2017.
tired of waiting
For years, Baghdad, US super-major Exxon- Mobil and PetroChina have talked about the rms’ involvement in the $53bn ISP, and a nal deal was rumoured to be forthcoming earlier this year. However, issues with the contract and ongoing safety concerns prevented terms from being reached.
Iraq now appears to have grown tired of wait- ing, with one of the sources quoted by Reuters saying: “We can’t wait for Exxon forever. We have serious problems with our sea pipelines and urgently need to nd partners to help build new ones. Further delays could harm our sea export infrastructure.”
In May, Middle East Oil & Gas (MEOG) reported that talks over the long-planned Com- mon Seawater Supply Project (CSSP) had bro- ken down between Iraq’s Ministry of oil (Moo) and ExxonMobil, with a $2.4bn package for the development awarded to Hyundai Engineering & Construction the following month. Hyundai’s pricing for the project was reported to have come in lower than that of ExxonMobil.
e CSSP is designed to take seawater from the Gulf, treat it then pipe it to major southern oilfields, where it will be injected to increase pressure in oil wells. With this key to Iraqi e orts to increase oil production, the importance of the
CSSP to the ISP is paramount.
ExxonMobil holds a stake of 25% in the giant
West Qurna-1 field, where it is partnered by Japan’s Itochu (20%), PetroChina (25%), Per- tamina (10%) and South oil Co. (SoC, 20%). e eld contains an estimated 9bn barrels of crude oil reserves, but increases in output are dependent on the injection of the large volumes of water to be provided by the CSSP.
However, BP has more exibility regarding its development of the supergiant Rumaila eld. Its Qarmat Ali water treatment plant provides around 500,000 barrels per day of water and the capacity could be doubled to avoid reliance on the CSSP.
With water- ooding planned to boost out- put, though, estimates have suggested that the eld’s water requirements could reach 8mn bpd.
Eni operates the Zubair eld as part of a con- sortium with South Korea’s Korea Gas Corp. (KoGAS) and state-owned Basra oil Co. (BoC) under a 2010 TSC originally targeting a plateau of 1.2mn bpd being reached by 2017. is was reduced in 2013 to 850,000 bpd. Production is currently understood to be around 475,000 bpd.
As reported by MEOG in 2016, the early focus of the ISP was to build infrastructure relat- ing to a group of oil elds to boost their collective output by at least 100,000 bpd to 350,000 bpd. ese elds are Luhais, Tuba, Artawi, Nasiriyah and Nahr Bin Umar.
Pressure
ough the pipeline deal is yet to be nalised, it would present another snub for ExxonMobil, which has enjoyed support for its e orts in the country from the US government. US Secretary of State Mike Pompeo made two visits to Bagh- dad in May to discuss the ISP deal with Iraqi Prime Minister Adel Abdul Mahdi.
Speaking to MEOG this week, an advisor to the Iraqi government said: “The US State Department is most adamant that Exxon should
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w w w . N E W S B A S E . c o m Week 32 13•August•2019