Exxon 'Fully Engaged' in Iraqi Megaproject

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Exxon Mobil is committed to participating in the $53 billion South Iraq Integrated Project (SIIP), despite a series of recent security scares in Iraq, Oil Minister Thamer Ghadhban tells Energy Intelligence. Exxon "are fully engaged with us," Ghadhban said in an interview in Vienna following the recent Opec meeting. The Texas-based major has evacuated staff twice from Iraq following attacks on US interests -- including a rocket attack at a residential compound in Basrah last month -- sparking fears that it might pull-out of the megaproject (IOD Jun.20’19). "They have not given us any impression that they will not sign, otherwise why should we talk with them?" Ghadhban said A heads of agreement is expected to be signed in Baghdad later this month for the SIIP project, which is vital to the further expansion of Iraq's production capacity and maintaining current capabilities in the country's southern oil heartland (IOD Jul.2'19). The project involves a giant 5 million barrel per day water injection scheme to maintain field pressure as well as extensive upgrading and construction of transportation infrastructure, boosting export capacity from 4 million to 6.5 million b/d. It will increase combined output from the 6.3 billion barrel Nahr bin Umar and the 2.5 billion bbl Ratawi fields from current levels of around 100,000 b/d to 550,000 b/d, while also developing some 750 million cubic feet per day of associated gas production from those fields. Exxon's involvement in the scheme goes back almost a decade, when it drew up initial plans for the Common Seawater Supply Project (CSSP). It withdrew soon afterwards, but funding challenges saw Baghdad reopen talks to bring Exxon back on board. In 2015, PetroChina was brought in and the following year, the scheme was expanded to include infrastructure (IOD Jan.28'16). If it goes ahead, the project will be pivotal to both companies. SIIP will reinforce PetroChina's already dominant position in Iraq's upstream -- it operates the 350,000-375,000 b/d Halfaya field, and the 130,000 b/d Ahdab project as well as holding stakes in the giant Rumaila and West Qurna-1 fields. For Exxon, it would reverse a pattern of retreat from Iraq (IOD May16'18). The SIIP will be financed with revenue from production at Nahr bin Umar and Ratawi, which marks a new approach for Iraq. "This project is a service contract by the way," Ghadhban said. When the deal was initially discussed, a revenue-sharing model had been discussed. The exact shares of the project that Exxon and PetroChina will each hold still needs to be decided. Some commercial issues remain to be worked out, Ghadhban said, signaling that there may still be a lot to do to turn the heads of agreement into an effective working contract. In May, state-owned Basrah Oil Co. awarded South Korea’s Hyundai Engineering and Construction a $2.4 billion contract to build water treatment facility and pipelines that will serve the CSSP (IOD May24'19). Rafiq Latta, Nicosia

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