Iraq is about to reach an agreement on the construction project of an oil export pipeline with "BP" and "ENI" instead of "Exxon Mobil"

BASRA, Iraq (Reuters) – Iraq is about to enter into an agreement with British BP and Italian companies Eni on an export pipeline project, which was originally scheduled to be part of A huge deal with the oil company, announced five Iraqi officials. American giant "Exxon Mobil".
The sources, who asked not to be named because the talks had not been made public, said that in the context of a $ 400 million draft agreement, the two Italian companies, Eni, manage a project to build two offshore oil pipelines to export oil from southern Iraq via the Gulf.
The pipeline construction was to be part of a larger project valued at $ 53 billion that ExxonMobil seemed to want to advance earlier this year, but an agreement with Baghdad was halted due contractual disputes and security problems, officials said.
This giant 30-year-old project is at the heart of exxon projects to enter Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC). Thus, the fragmentation of the schemes of the agreement could have a negative impact on the ambitions of the American giant.
Discussions between BP and ENI with Baghdad come after Iraqi officials announced in June that South Korea, Hyundai Engineering and Construction, would choose to build a seawater injection facility. an amount of $ 2.4 billion, another part of the agreement being discussed with Exxon.
ExxonMobil 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, during a surprise visit to Baghdad. At the time, Abdul-Mahdi had declared that Iraq was about to sign an agreement with the American company and its partner in the project "PetroChina" Chinese.
Negotiations, however, took a long time on the terms of the contract and, because of rising tensions between Iran and the neighboring United States, the two countries are essential allies of Iraq.
Talks aimed at reaching an initial agreement were blocked by at least two separate evacuations of foreign employees by Exxon from Iraq, the first after Washington warned of Iranian threats against US interests in that country, and the second because of a missile attack that seemed to target the company.
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. Offshore pipelines are a serious problem and there is an urgent need to find partners to help build new pipelines. "Additional delays could adversely affect our marine export structure."
The project, which Iraq is discussing with BP and ENI, involves the replacement of two old maritime 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 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 proposed agreement, BP will finance the project and ENI will resume aspects related to procurement, engineering and construction, the sources said.
Negotiations appear to be in the final stages now that the parties have reached a mechanism that will allow the UK company to recover its funding payments.
"In principle, we agreed that BP could recover the payments it would make by getting oil shipments instead of money, as our payment mechanism for the company operating the Rumaila oilfield," said an Iraqi official. .
Eni will receive money for his work, officials said.
The seawater injection project, chosen by the South Korean company Hyundai, was originally part of an Exxon draft agreement aimed at developing energy facilities. in the south of Iraq.
Iraq does not have a large water injection facility and needs wells, otherwise it risks losing pressure and suffering a sharp decline in production, particularly 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 facility at more than $ 2.4 billion. They added that 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.
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.