Chevron is discussing investments in two major Iraqi oilfields as Prime Minister Ali Al Zaidi seeks deals to revitalise an energy sector hammered by the Iran war.
During talks at Chevron's headquarters in Houston on Thursday, Mr Al Zaidi and an Iraqi delegation invited the US oil major to boost its operations in Iraq as part of Baghdad's efforts to increase its production and refining, and to enable its oil sector to diversify export routes, the Prime Minister's office said in a statement.
Iraq has been one of the producers hardest hit by the Iran conflict, where the effective closure of the Strait of Hormuz choked the country's oil production. Iraq's exports plunged from about 4.2 million barrels per day in February to about 1.45 million bpd in May, according to Opec data.
Before the war began, Chevron said it was entering exclusive talks with the state-run Basra Oil Company to operate the West Qurna 2 oilfield in southern Iraq, replacing Russian oil company Lukoil, which is under sanctions. The oilfield produces about 460,000 barrels of oil a day.
Chevron is also discussing investments in Nasiriyah, a smaller oilfield in southern Iraq, which produces about 90,000 barrels of oil a day.
“Chevron looks forward to sharing its expertise in successfully developing oil and gas projects to support Iraq in further developing its energy resources,” a company representative said in a statement.
The Wall Street Journal reported earlier that Chevron will also join a consortium of investors to explore rebuilding a pipeline from Kirkuk in northern Iraq to the Syrian port of Baniyas. The pipeline has been mostly defunct since it was damaged during the 2003 US-led invasion of Iraq.
“As a matter of policy, we do not comment on third party statements or matters of a commercial nature,” the representative said.
Gulf states have been seeking alternative routes to export their supplies since the Iran war essentially shuttered traffic in the Strait of Hormuz. About 20 per cent of the world's oil supply passed through the waterway before the conflict began. Only 13 ships passed through the strait on Wednesday, down from 21 on Tuesday, according to maritime data firm Kpler.
Oil prices fell about 1 per cent on Thursday, although they still remained near their one-month highs after hostilities in the strait resumed last week. Global crude benchmark Brent was trading 0.69 per cent lower at $84.36 a barrel, while US crude was trading 0.63 per cent lower at $79.10 a barrel as of 4.30pm ET.
While in Houston, the Iraqi delegation also held discussions with engineering and technology company KBR on oil production and investment opportunities, the Prime Minister's office said.
Oil deals were expected to be one of the tangibles emerging from Mr Al Zaidi's US trip, where he is seeking to place trade and investment at the forefront of US-Iraqi relations. Companies from both countries were expected to sign commercial deals valued at $60 billion during a US-Iraq Business Summit held at the Chamber of Commerce on Friday.
US Energy Secretary Chris Wright and Tom Barrack, the US envoy to Syria and Iraq, were also expected to attend the summit.
On Monday, President Donald Trump said that “massive” oil deals between the US and Iraq would be announced, without providing details.
“Iraq has tremendous potential because of their oil and because of other things,” he said before a bilateral meeting with Mr Al Zaidi at the White House.
Mr Al Zaidi was sworn in as Prime Minister in May after emerging as a compromise candidate when Washington rejected the previous nominee, former prime minister Nouri Al Maliki, because of his alleged close ties to Iran and its proxies. Mr Al Maliki denies the claims.
