ExxonMobil to boost Iraq output

US energy giant ExxonMobil looked poised to move ahead with a $53 billion project to boost Iraq’s oil output at its southern fields, a milestone in the company’s ambitions to expand in the country.

But now a combination of contractual wrangling and security concerns, heightened by escalating tensions between Iraq’s neighbour Iran and the United States, has conspired to hold back a deal, according to Iraqi government officials.

The negotiations have been stymied by terms of the contract that Baghdad objects to, said four Iraqi officials involved in the discussions who spoke to Reuters.

The main sticking point, they said, was the means by which Exxon proposed to recoup its development costs, with the company aiming to share the oil produced by two fields.

One of the Iraqi negotiators said Baghdad would not sign anything with the current terms proposed by Exxon.

ExxonMobil declined to comment on the terms of the contract or the negotiations, with a spokeswoman in Texas saying: “As a matter of practice, we don’t comment on commercial discussions.”

The deputy oil minister for upstream affairs, Fayadh Nema, said that talks were ongoing and he expected a deal soon. The negotiations have also been held up by two separate evacuations of Exxon staff from Iraq, a result of escalating regional tension between the United States and Iran. The first was in May after hundreds of US embassy staff were sent home over unspecified security threats from Iran. The second was this week following a rocket attack thought to have targeted the company. Tehran has not commented on the attacks, but the evacuations highlighted the persistent instability in Iraq that is hindering business, fuelled by the US-Iran tensions.

Reuters