Page 10 - MEOG Week 02 2022

MEOG PROJECTS & COMPANIES MEOG

Iraq to take control of Exxon’s stake at WQ-1

IRAQ IRAQ’S Ministry of Oil (MoO) last week said This was turned down by BOC, with a source
that the recently re-established Iraqi National Oil close to proceedings telling MEOG in mid-2021
Co. (INOC) would take control of ExxonMobil’s that the Iraqi government did not want the coun-
stake in the West Qurna-1 (WQ-1) oilfield. try’s upstream to be “dominated by Chinese
If completed, it will bring to an end more than companies”.
a year of back and forth between Iraqi authorities The developers are paid a maximum of just
and the US super-major which had previously $1.9 per barrel of oil produced from the asset –
lined up Chinese buyers for the 32.7% operated less than $1.2 per barrel after deduction of taxes
share. – under a 20-year technical services contract
On January 5, Oil Minister Ihsan Abdul Jab- (TSC) signed in 2010. It is worth noting that the
bar said that the cabinet had “approved the Iraqi WQ-1 TSC also does not cover gas production,
National Oil Company’s acquisition of Exxon- with China Petroleum Engineering & Construc-
Mobil’s share in West Qurna-1” without provid- tion Corp. (CPECC) awarded a $121mn deal in
ing any further details. late 2019 to upgrade facilities and increase the
Any deal will likely involve some wrangling capture of flare gas at the field.
around the transaction fee. Middle East Oil & In Q4, reports emerged that a proposal had
Gas (MEOG) understands that the technical been submitted to the MoO for US services spe-
services contract (TSC) for WQ-1 does not con- cialist Halliburton and the UK’s Wood Group
tain any provision for the sale of a stake in the to operate the field with financial backing from
asset, rather that ExxonMobil would be entitled US investment firm Twelve Seas Investment Co.
to compensation to recover capital expenditure However, Halliburton quashed these rumours in
related to the project, were it to be replaced. early December, saying “we are not buying any
ExxonMobil has divested nearly half of its fields”.
original 60% and is partnered by China’s Pet- WQ-1 currently produces 460,000 barrels per
roChina (32.7%), Japan’s Itochu (19.6%), Per- day (bpd) along with around 150mn cubic feet
tamina (10%) and INOC subsidiary Basra Oil (4.25mn cubic metres) per day of associated gas.
Co (BOC, 5%). In June, BOC signed a contract with Exxon-
The US firm is believed to value its share of Mobil and fellow American firm Schlumberger
the nine remaining years of the TSC at $350mn, to drill 96 wells allowing for an increase in out-
giving a total remaining contract value $1.07bn. put capacity from the current 500,000 bpd to
This was the figure discussed when it held talks 700,000 bpd. WQ-1 has combined oil and con-
with state-owned China National Petroleum densate reserves of more than 22bn barrels in
Corp. (CNPC) and China National Offshore Oil the southern portion of the broader West Qurna
Co. (CNOOC) in Q1 2021 over the sale of the deposit with the northern WQ-2 project led by
stake. Russia’s Lukoil.™

P10 www. NEWSBASE .com Week 02 12•January•2022