Page 7 - FSUOGM Week 27 2021

FSUOGM COMMENTARY FSUOGM

Floodgates open as more IOCs

seek to sell Iraq assets

Iraq’s Oil Minister this week said that more IOCs are looking to sell their

assets in the country as Exxon heads for the door

IRAQ BAGHDAD’S efforts to bring about a signifi- fees of any of the rates agreed during Iraq’s first
cant increase in oil production suffered another four bid rounds between 2009 and 2012.
WHAT: major setback this week as the country’s oil min- With a maximum remuneration fee of $1.15
BP and Lukoil are ister said more IOCs are keen to reduce their per barrel, according to Wood Mackenzie,
reported to be looking exposure or withdraw from Iraq altogether. Lukoil’s net profit from WQ-2 is just $0.56 per
to withdraw from their The news comes amid efforts by the federal barrel of oil equivalent when considering state
major Iraqi projects as government to study ways in which the terms equity interest and tax, with this dropping to
issues come to a head. of contracts with foreign developers may be $0.19 per boe after applying the performance
improved to make working in the country more factor.
WHY: attractive. In late May, Lukoil began a three-well pilot oil
Concerns about ESG, production programme targeting the Yamama
instability, corruption Heading for the exit formation at WQ-2 to produce 10,000 bpd per
and contract terms are Speaking in a video addressed to MPs that was well over the next three months.
all understood to have posted on Ministry of Oil (MoO) social media WQ-2 has a current production capacity of
played a part in the page, Ihsan Abdul Jabbar said: “The existing around 400,000 bpd from the Mishrif formation,
decisions. investment environment in Iraq is inappropri- though Lukoil reported recently that Q1 pro-
ate to keep the major investors. All major inves- duction averaged just 307,500 bpd on account of
WHAT NEXT: tors are either looking for another market or for compliance with OPEC+ output cuts.
Iraq is undertaking a another partner. We, as an investment environ- The company has plans to raise this by a fur-
study of its contracts with ment, are inappropriate for major partners.” ther 350,000 bpd through its Phase 3 Yamama
international operators, He added that Lukoil had informed him of its expansion and another 50,000 bpd to be added
but may not be able to intention to sell its 75% stake in the technical ser- from the Mishrif, taking total output capacity to
make the amendments vice contract (TSC) for the West Qurna-2 oilfield 800,000 bpd by 2025.
required to bring about a to Chinese companies and that BP intends to However, Lukoil is believed to be dragging
change in fortunes. withdraw from the Rumaila Operating Organ- its heels on the Mishrif expansion and a final
isation (ROO). investment decision (FID) is yet to be taken on
Yamama as the company pushes the MoO for an
Lukoil improvement to the maximum remuneration
Lukoil is understood to have grown frustrated by fee of $1.15 per barrel stipulated by the contract
OPEC+ quotas and the terms of its TSC, which signed in January 2010.
provides the Russian company with the lowest In addition to the unfavourable terms,

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