Iraq Close to Pipeline Deal with BP and Eni, Rather Than Exxon

OILMONSTER.COM- Iraq is close to reaching a deal with oil majors BP and Eni for an export pipeline project that was initially planned as part of a mega-deal with U.S. energy giant ExxonMobil, according to five senior Iraqi oil officials involved in the negotiations.

Under the proposed $400 million agreement, British company BP and Italy’s Eni ENI.NI would run the scheme to build two seabed oil pipelines for Iraq’s southern exports through the Gulf, the sources told Reuters, declining to be named as the discussions have not been made public.

The pipeline work was meant to be part of a larger, $53 billion project that Exxon looked poised to move ahead with earlier this year, but an agreement with Baghdad was held back by contractual wrangling and security concerns, the officials said.

The 30-year mega-project is the focus of Exxon’s plans to expand in Iraq, OPEC’s second-largest producer, and a chipping away of schemes from the deal could drag on the company’s ambitions.

The BP and Eni talks with Baghdad follow an announcement from Iraqi officials in June that South Korea’s Hyundai Engineering & Construction Co Ltd had been selected to build a $2.4 billion seawater injection facility - another part of the deal originally on the table with Exxon.

ExxonMobil and Eni declined to comment, while BP had no immediate comment.

In May, Iraq’s proposed bumper deal with Exxon appeared imminent. U.S. Secretary of State Mike Pompeo discussed it with Iraqi Prime Minister Adel Abdul Mahdi twice in three days, including during a surprise visit to Baghdad. Abdul Mahdi, meanwhile, said Iraq was close to signing the agreement with the American company and its venture partner PetroChina.

But negotiations subsequently became protracted over contract conditions and escalating tensions between Iraq’s bigger neighbor Iran and the United States, Baghdad’s two main allies.

Talks to reach at least an initial agreement were held up by two separate evacuations of Exxon’s foreign staff from Iraq, the first after Washington warned of Iranian threats to U.S. interests there, and the second prompted by a rocket attack that appeared to target the company.

The five senior Iraqi oil officials said the delays had forced Iraq to consider other companies to help construct infrastructure for its offshore export terminals.

“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,” said one of the officials, who oversees export infrastructure in the south of the country. 

Courtesy: www.reuters.com