Exxon to quit Iraqi US$50b oil project
Source: Agencies |
November 8, 2012, Thursday
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Print Edition
Print Edition
EXXON Mobil has officially informed Iraq's government it wants to pull out of a US$50 billion oil project, telling Baghdad in a letter it has started talks with other oil companies to sell its stake, senior Iraqi officials said.
Exxon's decision to quit the West Qurna-1 oilfield will exacerbate tensions between Baghdad and the autonomous Iraqi Kurdistan region, where Exxon has signed oil deals seen as more lucrative but dismissed by the central government as illegal.
Kurdistan has upset Baghdad by signing deals with foreign firms, including Exxon, Chevron and Total. Kurdish officials say that right is enshrined in the constitution.
But Baghdad says only the central government can control oil policy.
Iraq's Cabinet also said yesterday that it was expelling Turkey's state-owned TPAO from its exploration Block 9 oilfield but denied the measure was due to any proposed move by the Turkish company into Kurdistan.
The withdrawal of Exxon from a key project in Iraq's south, and doubts about who can replace the US giant also raise questions about the country's plans to increase crude production to 5-6 million barrels per day from 3.4 million bpd by 2015.
"Exxon has stated in its letter that it has started discussions with some international oil companies to sell its stake," Abdul-Mahdy al-Ameedi, director of Iraq's contracts directorate, said.
Baghdad will reply to the letter by Sunday, another oil official said. But it is still unclear who could replace Exxon in the huge oilfield, which pumps around 400,000 barrels per day of crude, with minority partner Royal Dutch Shell.
Some industry sources have said Baghdad is keen to replace Exxon with companies from Russia or China as a way to hit back at major Western oil majors. But it was unclear which firms would have the financial heft.
Russia's LUKOIL and Gazprom Neft are already working in Iraq. LUKOIL, which runs a project to develop West Qurna-2, has said that it lacks the resources to take on a project like West Qurna-1 for the moment.
Exxon is at the heart of a long dispute over oil reserves and territory between the Arab-led central government and ethnic Kurds.
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