Negotiations with Exxon for Basra mega-project still on, says Iraqi oil ministry

The $53bn scheme was the focus of the US major's work in Iraq

TOPSHOT - An employee stands at the Hammar Mushrif new Degassing Station Facilities site inside the Zubair oil and gas field, north of the southern Iraqi province of Basra on May 9, 2018. / AFP PHOTO / HAIDAR MOHAMMED ALI
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Iraq is not ruling out US oil major Exxon Mobil from participating in a $53 billion (Dh194bn) 30-year mega project to develop the country’s southern energy infrastructure, the oil ministry said on Saturday.

Not reaching an agreement or signing a deal with the US company did not mean the end of negotiations or the “exclusion” of Exxon Mobil, it said in a statement.

“The ministry affirms that its negotiations with US company Exxon Mobil are ongoing,” the country said.

The clarification comes after Reuters reported the ministry had reached an agreement with the UK's BP and Italian energy company Eni to develop a $400 million scheme to build two seabed pipelines. The development, which is part of a larger $53bn plan proposed by Exxon, was the focus of its work in Iraq.

However, Exxon's development of the project was impeded by wrangling over contracts and concerns over security, which in May forced the company to evacuate staff from Iraq.

In May, Iraq's Oil Minister, Thamir Ghadhban, called Exxon's call back of its staff "unacceptable and unjustified", urging the major to resume work.

In June, Exxon undertook another evacuation of its foreign staff after a rocket exploded near a camp for its field workers.

Exxon is the lead contractor in West Qurna, one of Iraq's largest oilfields, west of the southern province of Basra.

Both incidents came amid escalating tensions in the Arabian Gulf between the US and Iran, after tankers transiting the busy Strait of Hormuz came under attack. The US blamed Iran for the attacks.

Iraq, Opec’s second-largest producer has been looking to boost its export capabilities, particularly from its southern fields.

In June, Iraq awarded South Korea’s Hyundai Engineering and Construction a $2.4bn contract for a seawater injection facility, which was initially under discussion with Exxon.

Iraqi officials told Reuters the delays had an impact on the decision to award Exxon contracts for the southern export infrastructure.

“We can’t wait for Exxon forever. We have serious problems with our sea pipelines and urgently need to find partners to help build new ones. Further delays could harm our sea export infrastructure,” an official told the news agency.

One of the two seabed pipelines, on which Eni and BP will reportedly work was shut in 2017 following leakages. The other pipeline has been operating in partial capacity.

According to the proposed deal, BP would assume control of the project’s finance, while Eni would handle procurement, engineering and construction.

BP would accept payment in oil cargoes while Eni will be paid in cash, according to the officials.