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Class Editori News

Iraq to turn on again Eni's business, in team with Exxon and Petrochina

August 14, 2019


Abstract : Eni and BP will build an oil pipeline, a 400 million dollars project, but there is still room for the US giant. The development of the new Nahr Bin Umar and Artawi oilfields – with Exxon and Petrochina – is a work in progress.

MILAN, Aug 13 (Class Editori) – How distant in time now seems to be the days when the then CEO, Paolo Scaroni, spoke of "weakened enthusiasm" for Eni's adventure in Iraq. It was 2012, and even US oil companies were thinking of leaving entire areas of the country because of bureaucratic and geopolitical difficulties. Sought-after and rich oilfields, like West Kurna, struggled to attract new investors. Today, seven years later, the scenario has changed, to such an extent that in the last annual budget Eni announced the "achievement of the production record in Iraq", registering another million barrels of proved reserves and establishing the next plateau to 700 thousand barrels per day, with the expected drilling of the new wells in the Zubair oilfield, which has so far guaranteed a billion barrels. Now the focus is also on infrastructure, which Baghdad increasingly needs.

The Iraqi government chose Eni and BP to build a new oil pipeline intended for export in the Gulf area, a project worth around 400 million dollars, excluding Exxon, which was first considered for the order. But that is not so. The US giant, the Eni strategic partner in several consortia (from Kashagan to Mozambico) remains on course in the huge oil infrastructural project with an estimated value of 53 billion dollars for the next 30 years.

To stem the tide and not upset the balance on the Iraqi market, the deputy oil minister, Thamir Ghadhban guaranteed that there will also be room for Exxon. More simply, the pipeline assigned to Eni and BP has been removed from the overall plan, also to speed up its construction. Other details have been added to the news that the Italian-British tandem will be building the pipeline. BP would be responsible for the financial supervision of the project, while Eni would manage the engineering and construction aspects. According to leaks, BP could accept payments through oil supplies, while Eni would receive its part in cash.

Descalzi had met Thamir A. Al Ghadhban in Baghdad in February and April this year, in both cases to take stock of developments in the Zubair oilfield, operated by Eni Iraq BV with 41.56%, in consortium with the Iraqi company Basra Oil Company (29.69%), Kogas (23.75%), and State Partner (5%). Zubair's production has jumped beyond forecasts: in the last four years it has more than doubled, and a new 380MW power plant that will generate energy for domestic consumption is ready to run, but the real leap forward is still to be taken, because today Eni receives from Zubair just 34 thousand barrels a day on a total production of 500 thousand. As a matter of fact, the investment program provides for another 7 billion dollars in the oilfield development project. Moreover, the program includes the use of associated gas for power generation. The production capacity and the main facilities to reach the production target have already been installed, while the reserves present in the field will be progressively put into production through the drilling of additional production wells in the coming years. In Descalzi's plans, there are also potential synergies related to energy projects to launch in the country.

For example, the development of the new Nahr Bin Umar and Artawi oilfields – which today produce around 125,000 barrels a day – with Exxon and Petrochina, is a work in progress. Furthermore, the Eni presence in Iraq is strategic in the new expansion in the Middle East, with the United Arab Emirates, Bahrain, Lebanon and Oman.

Baghdad aims at reaching an overall production from the current 4.5 million barrels a day to over 6 million already in 2020. The export quota is close to 80%. Rumaila, West Qurna 1 and Gharraf remain the leading oilfields, but the Oil Ministry program plans to set up other activities in a short time, with the goal to challenge Saudi Arabia over the next few years. five years, doubling to 9 million barrels. This declaration of intent could also lead to a revision of the contracts. (All rights reserved)

(Source:Class Editori)

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Keyword: Eni Exxon oil

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