Page 5 - MEOG Week 30 2021

MEOG COMMENTARY MEOG

signed a deal last month with BOC and Schlum- Abbas was quoted as saying: “We hoped that
berger to drill 96 wells allowing for an increase in Chevron would buy Exxon’s share and be the
output capabilities to 700,000 bpd. The spokes- replacement, but it seems that they didn’t have
woman added: “We are proud of our history in the desire to be the replacement. [The MoO] told
Iraq and our long-standing positive relationships us officially, with an official letter, referring to
with the Basra Oil Co. and the government of the contractual text … that ExxonMobil [is pro-
Iraq, and will continue to work closely and con- ceeding toward] selling its share to a coalition of
structively to reach an equitable resolution.” the two companies, PetroChina and CNOOC.”
ExxonMobil is understood to value its share He noted: “We have no objection either on Pet-
of the remaining nine years of the 20-year tech- roChina nor CNOOC, they are our partners
nical services contract (TSC) signed in 2010 already.”
at $350mn, with the full 100% worth $1.07bn. However, shortly afterwards, Iraq Oil Report
Exxon, like other IOCs, is understood to have authenticated a letter with Iraqi officials in which
grown tired of bearing the brunt of OPEC+ BOC said: “We’d like to let you know that we
output cuts, while corruption and other issues don’t agree with the terms you’ve agreed to with
developing the CSSP have slowed expansion the two companies.” The state company added
of the field, rendering the already challenging that it would not match the terms agreed with
terms of the upstream play even less appealing. the Chinese firms. “If BOC wants to buy your
contract share, this should be considered under
One-track mind new terms and conditions,” it said.
However, the Iraqi government is intent on find- From ExxonMobil’s perspective, the sale
ing an American replacement for Exxon. Speak- “aligns with [its] strategy to focus on advantaged
ing to press following a meeting in Washington assets with the lowest cost of supply, including
with President Joe Biden, the country’s Prime developments in Guyana, Brazil and the US Per-
Minister Mustafa al-Kadhimi said: “When mian Basin,” according to the spokeswoman.
ExxonMobil departs, we will not accept its Meanwhile, BP also appears to be heading for
replacement to be other than another American the exit from Iraq, while Lukoil is understood to
company,” without mentioning any preferred be considering selling at least part of its stake in
firms. West Qurna-2. With such drastic measures in
He explained that the company was “consid- place, pressure is on Baghdad to take steps to
ering exiting Iraq for reasons that are to do with expedite the government’s promised re-assess-
its internal management practices, decisions, ment of its upstream contracts with interna-
and not because of the particular situation in tional partners. With the MoO seemingly keen
Iraq”. to maintain the involvement of Western IOCs, it
In May, BOC director-general Khalid Hamza should act fast.™

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