Diplomatic sources of Southern Iraq reported that Exxon Mobile desired to leave it giant oilfield project in Iraq, due to country’s internal tensions that hindered Baghdad’s aggressive energy exploring plans. World’s largest publicly oil trading company has been decided so as they have reported that they have made very slim profits from oil exploration, worthy of $50 billion from West Qurna-1 project.
The exit from this project is rising the issue of the company’s deal with Kurdish region of Iraq, which was signed a year ago and incentive are really high on that region. Baghdad penalized Exxon on the charge of illegal business and ripped its contract for West Qurna-1, which has 8.7 billion barrel oil reserves.
"Exxon is telling Baghdad: 'We are letting you know we're looking to leave,” One of the Iraqi diplomats explained and further added, “They are shopping around and looking at all the options.” The company, including US state department has declined this comment though!
According to West Qurna-1 industry sources claim,” If they can find the right buyer, they will pull out. It's an unusual move for Exxon. They usually don't give up.” Few sources are revealing the fact that Baghdad is eager to replace Exxon with Russian company or even Chinese companies to set an example of ethics for the Western Oil majors. This decision of Iraq will definitely have an impact over the political and diplomatic situation of Iraq. However, U.S. Secretary of State Hillary Clinton remained muted on this issue during a speech on energy diplomacy at Georgetown University in this week.
Though she said she is not worried that Russian company is replacing the Exxon, oil major from US. Russian, American, French and Chinese – all companies will take a voyage to Iraq for exploring the energy sector and give an economic thrust to the global marketplace.
She appreciated Iraq’s vision on oil exploration and setting up a double target of current situation in next 20 years by adding the lines, "Major Iraqi success story helped by the (U.S) Departments of State and Energy". The state department has also proclaimed that they had helped Iraqi govt. to understand aspects of their infrastructure and helped to improve investment plans to capture oil market.
Battle Is On!
Texas based global company Exxon flexed is muscle and throws challenge against Baghdad by getting into a deal with the Kurdish State autonomous govt. Like Exxon, other major oil exploring companies like Chevron, Total and Russia's Gazprom Neft followed the footprints.
The stock of Exxon barely budgeted and that is what signifying more stakes for Iraq in Kurdish regional politics. The oil dispute contract has become a big battle between the Baghdad and Kurdistan. Iraqi PM Nuri al-Maliki has gone to the US president and discussed on this and requested to pull out Exxon from the West Qurna-1 project. He remarked that the company’s activity is hampering the internal peace of the country. However, Iraqi minister stated to kick out Exxon from the oil exploration project in Iraq, recently!
Shahristani mentioned that, “All companies that entered in such contracts were asked to cancel them or pull out. Exxon Mobil can be contacted about their decision.”
Kurdish Profile Rising
Despite of Baghdad’s tough and straight-cut remarks, Exxon chief executive said,” In March the company was committed to expanding output at West Qurna, where it is in charge, as well as exploring in Kurdistan.” Partner of Royal Dutch Shell, Exxon signed up with Iraq, earlier this year. And it expected to provide production 2.825 million barrels per day by 2017.
The central to Baghdad, West Qurna-1 is planning more than triple production rate in coming decades. Iraq is anticipated as to become on of the major rival of Saudi Arabia. However, Iraq is now the second largest producer.
The pace of expansion is a bit slow s of now and Exxon has a lot of complaints, regarding the infrastructure of the country. They identified that lack of infrastructure is making the process of growth for oil production slower.
Now Exxon is raising its profile in Kurdish region and drilling will start from next month and so on. Exxon is also setting up an office in the Kurdish region capital Arbil.
Source [Reuters]