Page 5 - MEOG Week 32

MEOG Commentary MEOG
be present in all key energy projects.”
With such high-level involvement, it was perhaps unsurprising that the Moo released a statement over the weekend denying that the progress of talks with BP and Eni would mean an end to talks with ExxonMobil. “ e ministry a rms that its negotiations with US company
ExxonMobil are ongoing,” it said.
The statement added: “Not reaching an
agreement or signing a deal between both par- ties does not mean the end of negotiations or the ‘exclusion’ of ExxonMobil from the project as reported by news agencies citing o cials they did not name.”
Meanwhile, MEOG understands that the Ital- ian government has pushed for Eni to “be more facilitating” when it comes to projects in Iraq.
Infrastructure investment
Reuters reported that the deal would see BP provide funding for the pipelines, with Eni responsible for engineering, procurement and construction (EPC) tendering. Its sources added that BP would recover its costs by taking oil car- goes, while Eni would be paid in cash.
However, the advisor to the Moo told
MEOG, though, that “a good part of the infra- structure will be replaced even though some [of itis]lessthanafewyearsold”.
He added that he had learnt that the reason for the early replacement was that the “new service and engineering contracts are the most lucrative facets of energy contract”, and suggested that the Moo’s strategy would see elements of the work subcontracted to local contractors connected with government o cials.
Iraq has held lo y ambitions of ramping up oil output to a level that would challenge Saudi Arabia, but these have been hampered by two signi cant obstacles: a lack of export infrastruc- ture and a lack of water for injection.
Baghdad has made a recent statement of intent to proceed with the long-awaited crude conduit through Jordan to the Red Sea. With this, the seawater line deal with Hyundai in June and these reports of progress on a deal to improve facilities to ABoT and KAAoT, Iraq is trying to remove the most signi cant barriers. Keen observers, though, will be hesitant about becoming too optimistic, and any forthcoming talk of ambitious oil production targets should be taken with a pinch of salt.™
Map of oil and gas assets and infrastructure in southern Iraq.
Week 32 13•August•2019 w w w . N E W S B A S E . c o m
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