Baghdad: The Iraqi government has been informed by Exxon Mobil that it wants to opt out of an oil project worth $50 billion. Iraq’s cabinet also reported expulsion of TPAO, turkey’s one of the most significant natural oil and gas company from an exploration contract on Wednesday. Both are indicative of impending trouble in Iraq’s petroleum policy.
Director of Iraq’s contracts directorate, Abdul-Mahdy al-Ameedi reported that Exxon has mentioned in its letter that in order to sell Exxon’s stake it has already initiated discussions with other international oil producing companies. This move of Exxon to decamp the oilfield located at south Iraq named West Qurna-1 will aggravate tensions and embitter relations between Iraqi Kurdistan, the autonomous region and Bagdad. It is here in Iraqi Kurdistan that Exxon has endorsed oil deals proclaiming it to be more lucrative but has been dismissed considering illegal by the central government.
Baghdad is extremely upset with Kurdistan owing to its signing of oil deals with various foreign companies including Total, Chevron and Exxon. On this Kurdish officials are of the opinion that they have legitimate and constitutional rights of doing so but this has been sternly refuted by the central government by saying that they can only exercise powers in matters dealing with oil policy.
Iraq cabinet also mentioned that TPAO, the Turkish oil and gas company has been expelled from the consortium regarding the exploration deal for a block 9 oilfield in the Basra region for unspecified reasons repudiating the fact that this expulsion was prompted by the move of TPAO into Kurdistan.
An oil official said that Baghdad is planning to reply Exxon by this Sunday but is not very sure that who would be the next to replace Exxon after it relinquishes the huge oil field. This oil field is reportedly to pump around almost 4000,000 bpd of crude oil. There has been no further comment by Exxon on its future plans.
This doubt regarding which company is to replace Exxon has raised potent questions regarding Iraq’s aim to aggravate and magnify crude oil output to 5-6 million from 3-4 million bpd by 2015. Industry sources have mentioned that Baghdad is looking forward to supplant Exxon with Russian or Chinese companies. But is quite misty as to which other companies would possess the financial heft to next Exxon.
Russian companies namely Gazprom Neft and LUKOIL are presently operating in Iraq. LUKOIL is already running a program in Iraq to develop the region of West Quna-2 and has mentioned that at present it does not possess the resources required to take charge of a project as in West Qurna-1.
There is quite a prolonged dispute between the Arab conducted central government and the ethnic Kurds who since 1991 have been running their own provincial government in northern Iraq, over territory and oil reserves and Exxon is presently at the heart of this dispute.
As already stated Turkish owned TPAO has been declared expelled from the Block 9 consortium where TPAO holds a stake of 30 percent and Kuwait Energy has been asked to boost its stake from 40 percent to 70 percent and the rest 30 percent would be held by Dragon Oil.
In retort to Iraq’s plan Taner Yildiz the energy minister of Turkey quoted on Wednesday by saying “we respect their decision. If they see such a contract renewal or stake transfer appropriate, we don’t mind either,”
Al-Ameedi said that “the cabinet rejected the approval of Turkey’s TPAO as a partner.” “Removing TPAO has no connection with Kurdistan deals. We know TPAO has no deals in Kurdistan. But this decision was taken for other reasons.”
Al-Ameedi refused to provide any further information on this issue.
Iraqi oil official mentioned that TPAO’s other activities in Iraq’s oil and gas fields would remain completely unaffected by this expulsion of TPAO from the block 9 oilfield. In the oilfields of Maysan and Badra TPAO holds minority stakes and with collaboration of Kuwait Energy is running two gas fields, one located in the Diyala province and the other in the southern oil hub of Basra.
This expulsion of Turkey’s TPAO comes in the midst of strain between Ankara and Baghdad after Nuri-Al-Malik; the Iraqi prime minister was accused by Turkey of sidelining Sunni Muslims since the inception of a political crunch in Iraq after the U.S. led troops left Iraq in December.
Source: [Chicago Tribune]