Page 9 - MEOG Week 29 2022

MEOG POLICY & SECURITY MEOG

Markets await word on non-dollar

payments for energy supplies

MARKET THE markets are awaiting the outcome of talks collapsed in value in recent years.
between Turkey and Russia on Ankara paying Russia provided a quarter of Turkey’s oil
Moscow for Russian energy supplies in curren- imports and 45% of its gas imports last year. That
cies other than the dollar. gave it a huge surplus in bilateral trade in excess
A Bloomberg report suggested the matter was of $20bn.
set to be raised when Turkish President Recep The de-dollarisation mechanism under con-
Tayyip Erdogan met Russian President Vladimir sideration could allow Turkey to use pound ster-
Putin in Tehran on July 19. ling for energy imports from Russia, with some
The move could conceivably further policies payments in lira, which Moscow could use to
of both countries. Russia would make another finance Russian purchases of goods and services
step in its policy of applying de-dollarisation to from Turkey, according to Bloomberg.
international trade. Russian economist Alexander Isakov told the
Meanwhile Turkey - hard-pressed for FX news service that if the deal went ahead it might
reserves - could slow down the decline in the “mean less pressure on its [Turkey’s] currency as
financial firepower it holds as it continues with it [Ankara] will be able to finance part of its for-
its fight to defend the Turkish lira, which has eign trade deficit locally”.™

PROJECTS & COMPANIES

Iraq to pay $300mn for Exxon’s stake in WQ-1

IRAQ THE Iraqi government will allocate $300mn National Oil Company’s acquisition of Exxon-
in its next budget for its state oil firm to acquire Mobil’s share in West Qurna-1”.
ExxonMobil’s operated 32.7% stake in the West Middle East Oil & Gas (MEOG) understands
Qurna-1 (WQ-1) oilfield, resolving the US firm’s that the technical services contract (TSC) for
protracted departure. Both the Al Sabaah and WQ-1 does not contain any provision for the
Attaqa newspapers cited government sources as sale of a stake in the asset, rather that ExxonMo-
saying that the budget allocation would allow the bil would be entitled to compensation to recover
Iraq National Oil Co. (INOC) to proceed with capital expenditure related to the project, were it
acquiring the stake. to be replaced.
When the transaction is complete, it will The developers of WQ-1 are paid a maximum
bring to an end a challenging period for Bagh- of just $1.9 per barrel of oil produced from the
dad, which objected to efforts by ExxonMobil asset – less than $1.2 per barrel after deduction
to sell its share in WQ-1 to state-owned China of taxes – under a 20-year technical services
National Petroleum Corp. (CNPC) and China contract (TSC) signed in 2010. It is worth not-
National Offshore Oil Co. (CNOOC) in Q1 ing that the WQ-1 TSC also does not cover gas
2021. production, with China Petroleum Engineer-
ExxonMobil has divested nearly half of its ing & Construction Corp. (CPECC) awarded
original 60% and is partnered by PetroChina a $121mn deal in late 2019 to upgrade facilities
(32.7%), Japan’s Itochu (19.6%), Pertamina and increase the capture of flare gas at the field.
(10%) and INOC subsidiary Basra Oil Co. WQ-1 currently produces 460,000 barrels per
(BOC, 5%). day (bpd) along with around 150mn cubic feet
Oil Minister Ihsan Abdul Jabbar told Al (4.25mn cubic metres) per day of associated gas.
Sabaah that negotiations between the Ministry In June, BOC signed a contract with Exx-
of Oil (MoO) and the US super-major had lasted onMobil and fellow US firm Schlumberger to
more than three months. drill 96 wells, allowing for an increase in out-
He added that according to a feasibility study, put capacity from the current 500,000 bpd to
the Iraqi government would recover the $300mn 700,000 bpd. WQ-1 has combined oil and con-
sum in just two years of WQ-1 operations. densate reserves of more than 22bn barrels in
Iraq affirmed its intention to add to BOC’s the southern portion of the broader West Qurna
share in the field in January, when Abdul Jab- deposit, with the northern WQ-2 project led by
bar said the Cabinet had “approved the Iraqi Russia’s Lukoil.™

Week 29 20•July•2022 www. NEWSBASE .com P9