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Exxon seals Iraq oilfield payments deal
Friday, 16 Mar 2012
Reuters reported that Exxon Mobil and Baghdad have reached agreement for the US-based company to be paid in oil for work on the huge West Qurna-1 oilfield after months of negotiations over contract terms.
An Iraqi oil official said that the foreign oil companies involved in Iraq's oil expansion generally prefer to be compensated for capital expenditure and service fees in oil because cash payments are more complicated to arrange.
BP which leads the Rumaila project and Italy's Eni leader of the Zubair project had signed up to Iraq's oil sales agreement from the outset the first step towards being paid in crude.
An industry source said that Exxon and minority partner Royal Dutch Shell held out as they sought to tighten up some contractual loose ends. After lengthy negotiations, the parties have reached an agreement in which the world's largest publicly traded oil company also will get paid in crude. Exxon and Shell spent USD 910 million on West Qurna-1 last year and were repaid USD 470 million in cash.
In principle there is agreement although there is nothing in writing yet. Exxon asked us to rephrase some of the wording which in general will not affect the provisions of State Oil Marketing Organization’s oil export agreement.
Iraq has signed service contracts with international oil companies targeting a total production capacity of 12 million barrels per day by 2017. But industry observers say infrastructure problems and logistical bottlenecks are likely to limit their output to about half that level.
Source - Reuters
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Friday, 16 Mar 2012
Reuters reported that Exxon Mobil and Baghdad have reached agreement for the US-based company to be paid in oil for work on the huge West Qurna-1 oilfield after months of negotiations over contract terms.
An Iraqi oil official said that the foreign oil companies involved in Iraq's oil expansion generally prefer to be compensated for capital expenditure and service fees in oil because cash payments are more complicated to arrange.
BP which leads the Rumaila project and Italy's Eni leader of the Zubair project had signed up to Iraq's oil sales agreement from the outset the first step towards being paid in crude.
An industry source said that Exxon and minority partner Royal Dutch Shell held out as they sought to tighten up some contractual loose ends. After lengthy negotiations, the parties have reached an agreement in which the world's largest publicly traded oil company also will get paid in crude. Exxon and Shell spent USD 910 million on West Qurna-1 last year and were repaid USD 470 million in cash.
In principle there is agreement although there is nothing in writing yet. Exxon asked us to rephrase some of the wording which in general will not affect the provisions of State Oil Marketing Organization’s oil export agreement.
Iraq has signed service contracts with international oil companies targeting a total production capacity of 12 million barrels per day by 2017. But industry observers say infrastructure problems and logistical bottlenecks are likely to limit their output to about half that level.
Source - Reuters
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