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BAGHDAD (Reuters) – Iraq is about to reach an agreement with international oil companies BP and Italian Eni on a pipeline project to export oil to the Persian Gulf, officials said on Friday. Iraqi.
The project was originally expected to be part of a huge deal with US oil giant Exxon Mobil.
The Reuters news agency quoted sources who asked not to be named because the talks had not been made public: as part of a $ 400 million draft agreement, the Italian group Eni would manage a project to build two offshore oil export pipelines. Iraq through the gulf.
Officials said the pipeline works were to be part of a larger $ 53 billion project that Exxon appeared to be preparing to make earlier this year, but an agreement with Baghdad has stopped because of contractual disputes and security issues.
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 come after Iraqi officials announced in June that South Korean engineering and construction company Hywandi had chosen to build a water injection plant in the country. sea in the amount of 2.4 billion, another part of the agreement under discussion with Exxon.
Exxon Mobil and Eni declined to comment and BP did not comment on the talks.
In May, the huge deal Iraq would make 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 the agreement with the US company and its partner in the PetroChina project.
But negotiations took a long time on the terms of the contract and because of the escalating tensions between Iran and the neighboring United States, the two countries are essential allies of Iraq .
Negotiations to reach an initial agreement have been blocked by at least two separate evacuations of foreign Exxon employees in Iraq, the first after Washington warned of Iranian threats against US interests and the second. because of an attack using missiles near 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, we have serious problems with offshore pipelines and we urgently need to find partners to help build new pipelines," said a senior official who oversees the infrastructure of the pipeline. 39, export to the south of the country. Our navy. "
Fractures and leaks
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 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.
"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 it for wells or risks losing pressure and falling production, especially in its aging oil fields. Since fresh water is a scarce resource in Iraq, the use of treated seawater is one of the best options.
Three oil executives said the cost of the project was over $ 2.4 billion at Hyundai. 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 agreement, announced by the Basra Oil Company, a public company, still requires final approval from the Ministry of Petroleum. One official said the agreement would be finalized before the end of the year.
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