Iraq to resume oilfield water injection talks
Baghdad, September 9, 2011
Iraq expects to resume talks with oil majors this month on a multi billion-dollar oilfield water injection plan after disagreement over costs suspended the project for months, a senior oil official said.
Exxon Mobil was picked on behalf of foreign oil firms to lead the mega water-injection project, needed to boost crude production rates from Iraq's southern oilfields.
International oil companies that won contracts in southern oilfields include Royal Dutch Shell, Lukoil , BP and Italy's ENI .
'Exxon Mobil, with other companies, have reviewed their position and returned with new suggestions and ideas that agree with the Oil Ministry's demands,' Abdul-Mahdy al-Ameedi, head of the ministry's contracts and licensing directorate, told Reuters in an interview late on Thursday.
'I can say we will reach an agreement with companies this time.'
Ameedi said the Oil Ministry would start studying a revised version of a 'heads of agreement' (HOA), which governs the principles for starting the project, along with new proposals submitted by Exxon Mobil and the other companies, after a three-day roadshow Sept. 11-13 in Jordan.
Iraqi oil officials will present protocols for its 4th energy auction, scheduled for late January, to potential bidders at the meeting in Amman.
'We are busy with the fourth auction roadshow now and after finishing it we will straightaway start studying the new proposals and the revised heads of agreement. We will resume meetings with Exxon Mobil and other leading companies after mid-month,' Ameedi said.
OPEC member Iraq has signed a series of deals with oil majors to develop its largest oilfields and is seeking to boost production as the country pulls back from years of war and economic sanctions.
The water injection scheme would help raise extraction rates and maintain reservoir pressure to overcome production declines at fields such as West Qurna, Majnoon, Zubair and Rumaila.
Iraq had previously agreed with the oil companies that the project needed to be built in phases with the first phase to involve the pumping of 2 million barrels per day of water to Rumaila, Zubair and West Qurna Phase One. The companies wanted to double that amount to 4 million bpd.
While the total cost of the project remains uncertain, an Iraqi government official said last year it was expected to exceed $10 billion.
To overcome disagreement over the cost, Iraq has suggested starting pre-Front End Engineering and Design (pre-FEED) and Front End Engineering and Design (FEED) studies aimed at producing an accurate cost for the project, Ameedi said.
'It's very difficult for us to determine an accurate cost for the project because Iraq lacks adequate studies which could help in estimating the project cost,' said Ameedi.
'When we finish the pre-feed and feed studies, it will be easy to set a cost accordingly and this is the best solution for us and companies to overcome the cost issue.' – Reuters