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Exxon's $53 bln Iraq deal hit by contract snags, Iran tensions - sources

Video credit: Reuters Studio
Published on June 21, 2019 - Duration: 01:18s

Exxon's $53 bln Iraq deal hit by contract snags, Iran tensions - sources

Just weeks ago, U.S. energy giant ExxonMobil looked poised to move ahead with a $53 billion project to boost Iraq's oil output.

But Iraqi officials say contractual warngling and security concerns are making a final agreement increasingly unlikely.

David Pollard reports.

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Exxon's $53 bln Iraq deal hit by contract snags, Iran tensions - sources

Monday was a milestone for Iraq's West Qurna oilfield.

Developed by ExxonMobil, production hit 465,000 barrels a day after the completion of new processing and storage facilities.

But what's reportedly some distance from completion is a 53 billion dollar 30-year mega deal for Exxon and PetroChina to boost output across Iraq's southern oil fields.

That's according to Iraqi government officials.

Security is a top concern, it's reported.

A recent spate of attacks in the region has seen U.S.-Iran tensions flare and has led to not just the U.S. government, but also Exxon pulling staff from Iraq.

A move oil minister Thamer Ghadhban slammed as 'unacceptable' and politically motivated.

And there's the contract itself.

Iraq is said to be objecting to Exxon's proposal for it to recoup development costs by sharing output from two oil fields.

Baghdad instead in favour of a service contract where Exxon would be paid per barrel produced.

Iraq is OPEC's second biggest oil exporter, last month a deal appeared close to signing.

Differences are now said to be so significant, they could prevent even a preliminary agreement anytime soon.

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