Pay­ment in kind suits oil gi­ants fine

The Weekend Australian - Travel - - Resources -

THE West’s big­gest oil com­pa­nies are in talks with the gov­ern­ment of Iraq to boost the coun­try’s oil and gas out­put. Un­der a spe­cially de­signed tech­ni­cal ser­vices agree­ment, ExxonMo­bil, Chevron, Cono­coPhillips and Shell would be paid in oil rather than cash to help de­velop the fields.

The de­ci­sion, which is po­lit­i­cally highly charged in Iraq, would in­volve the oil ma­jors tak­ing on the role of spe­cial con­trac­tors to the gov­ern­ment. The agree­ments would cover a variety of dif­fer­ent oil and gas­fields in west­ern, south­ern, cen­tral and north­ern Iraq. Shell, for ex­am­ple, is in­ter­ested in the Akkas gas­field in An­bar and an­other gas­field in the south of the coun­try.

The Iraqi oil min­istry has de­signed the con­tracts to en­cour­age West­ern oil com­pa­nies to pro­vide train­ing, equip­ment and ex­per­tise to help Iraq meet a tar­get of in­creas­ing pro­duc­tion to 2.6 mil­lion bar­rels by the end of this year and 2.8mil­lion within two years, from about 2.4 mil­lion now.

Of­fi­cials from sev­eral oil com­pa­nies have been meet­ing Iraqi of­fi­cials in Am­man, Jor­dan, in re­cent weeks to fix the terms. The com­pa­nies in­volved would be favoured in bid­ding for longer term con­tracts on the fields — which are some of Iraq’s largest pro­duc­ers — set for this year. An­other bid­ding round is ex­pected to take place next year. At an es­ti­mated 115 bil­lion bar­rels, Iraq’s oil re­serves are the third largest in the world af­ter Saudi Ara­bia and Iran.

How­ever, a long-run­ning po­lit­i­cal dis­pute with the Kur­dis­tan re­gional gov­ern­ment in north­ern Iraq has de­layed the in­tro­duc­tion of a hy­dro­car­bon law, which would di­rect how the funds raised would be used and whether they would go to cen­tral gov­ern­ment in Bagh­dad or the re­gional ad­min­is­tra­tions.

Se­cu­rity re­mains a key con­cern and most of the work is likely to be car­ried out by Iraqis or other Arab cit­i­zens rather than by ex­pa­tri­ates.

KUWAIT has re­vealed plans to spend $51 bil­lion over the next five years to up­grade its oil and gas in­dus­try.

Saad al-Shuwaib, the chief ex­ec­u­tive of Kuwait Pe­tro­leum Cor­po­ra­tion, said that the Gulf state planned to spend the cash on a range of projects in the en­ergy sec­tor, which gen­er­ates 95 per cent of the coun­try’s rev­enues.

He said that the projects in­clude rais­ing Kuwait’s oil out­put ca­pac­ity from 2.7 mil­lion bar­rels per day to four mil­lion by 2020, as well as build­ing a large re­fin­ery and up­grad­ing ex­ist­ing re­finer­ies. The Times

Know-how: Iraq needs tech­ni­cal ser­vices to help de­velop its oil fields, and is pre­pared to pay in prod­uct rather than cash

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.