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BASRA – Iraq is about to enter into an agreement with international oil companies BP and Eni on an export pipeline project that was originally expected to be part of a huge deal with the US oil giant, Exxon Mobil, announced five Iraqi officials.
The sources, who asked not to be named because the talks had not been made public, told Reuters that, as part of a $ 400 million draft agreement, BP and the Italian Eni would manage a project to build two offshore oil pipelines to export oil from southern Iraq via the Gulf.
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 the expansion exxon projects 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' announcement in June that South Korea, Hyundai Engineering and Construction, would build a $ 2.4 billion seawater injection facility. dollars, another part of the deal discussed with Exxon.
Exxon Mobil and Eni declined to comment, while BP has not commented yet.
In May, the huge Iraqi agreement with Exxon seemed imminent. US Secretary of State Mike Pompeo discussed the agreement with Iraqi Prime Minister Adel Abdul Mahdi twice in three days, including during a surprise visit to Baghdad. In the meantime, Abdul Mahdi said Iraq was about to sign an agreement with the US company and its partner in the PetroChina project.
However, the terms of the contract have taken a long time and, due to escalating tensions between Iran and the neighboring United States, the two countries are essential allies of Iraq.
Talks aimed at reaching an initial agreement have been blocked by at least two separate evacuations of foreign Exxon workers in Iraq, the first after Washington warned of Iranian threats against US interests in that country, and the second because of a missile attack that apparently targeted society.
The top five Iraqi officials said the delays had forced Iraq to consider other companies to help build its seaport export infrastructure.
"We can not wait for Exxon forever," said one official who oversees the country's export infrastructure in the south of the country. We have serious problems with offshore pipelines and we urgently need to find partners to help build new pipelines. Additional delays could adversely affect our marine export structure. "
The project in Iraq is under discussion with BP and ENI plans to replace two old offshore pipelines, including an abandoned pipeline that transports crude oil to the port of Khor al-Amiya.
Officials in the oil sector said that loading operations have been halted in Khor al-Amiya since 2017, after the pipeline broke and leaks had to be closed. The other pipeline serves in part to ship crude oil to the port of Basra.
Under the terms of the proposed agreement, BP will finance the project and Eni will handle 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.
"In principle, we agreed that BP could recover the payments it would make by taking shipments of oil instead of money, as our payment mechanism for the company operating the Rumaila oilfield," said an Iraqi official. .
Officials said that Eni would be paid for his work.
The seawater injection project, which Hyundai chose to take over, was originally part of the agreement envisioned by Exxon to develop energy facilities in the south from Iraq.
Iraq does not have a large water injection facility and needs a well, otherwise it runs the risk of losing pressure and falling production, especially in its oil fields aging. Since fresh water is a scarce resource in Iraq, the use of treated seawater is one of the best options.
Three oil executives said Exxon estimated the cost of the project at more than $ 2.4 billion. The rest of the project proposed by Exxon could be outsourced to other companies if it offered lower costs, including a project to build additional crude storage facilities, they said.
The Hyundai deal, announced by the Basra Oil Company, a state-owned company, still requires final approval from the Ministry of Petroleum. One official said the agreement would be finalized before the end of the year. REUTERS
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