Iraq is approaching a pipeline agreement with BP and Eni

Iraq is close to an agreement with the international oil companies BP and the Italian Eni on an export pipeline project, Reuters news agency reported, quoting Iraqi sources.

Under a proposed $ 400 million deal, BP and ENI will run a project to build two offshore pipelines to export oil from southern Iraq via the Gulf, sources said.

The project was originally expected to be part of a huge deal with US oil giant Exxon Mobil.

Officials said the pipeline's work should be part of a larger $ 53 billion project for which Exxon appeared to be preparing earlier this year, but an agreement with Baghdad was halted because of contractual disputes and security problems.

The 30-year-old giant is at the heart of Exxon Mobil's plans to set up operations in Iraq, OPEC's second largest producer, and the fragmentation of projects resulting from this deal could have a negative impact on the company's ambitions.

Discussions between BP and ENI with Baghdad follow the Iraqi authorities in June, announcing that Hyundai Engineering and Construction of South Korea would build a $ 2.4 billion seawater injection facility in the US. framework of the current agreement with Exxon.

Exxon Mobil and Eni declined to comment, while BP has not commented yet.

The project, which Iraq is discussing with BP and ENI, involves the replacement of two old offshore pipelines, including a blocked pipeline that transports crude oil to the port of Khor al-Amaya.

Officials in the oil sector said that loading operations have been halted at Khor Al-Amiya since 2017, after the pipeline broke and leaks had to be closed. Another pipeline works in part to ship crude oil to the port of Basra.

Under the proposed agreement, BP will finance the project and Eni will take over the aspects related to public procurement, engineering and construction, the sources said.

The negotiations are in the final stages when the parties have reached a mechanism allowing the UK company to recover its financing payments.

Exxon has estimated the cost of the project at more than $ 2.4 billion, according to three oil executives.