Iraq Approves Major Oil Contracts for Eni

Source: Reuters 2/25/2014, Location: Middle East

Iraq has approved major contract items for Eni's giant oilfield project in its south, just hours after the Italian company threatened to pull out if red tape was not cut.

Rising violence has not hit operations at the southern fields driving Iraq's oil expansion, but Western companies at work there say deteriorating security and the distraction of elections at the end of April may be slowing the contract approval process.

Italy's Eni, on the other hand, was seeking swift approval for contracts to push the Zubair oilfield, now pumping about 320,000 barrels per day (bpd), towards a target of 850,000 bpd.

"We respect Eni and take their opinions seriously. We want them to stay in Iraq," the Iraqi official said.

"We're doing our best to approve high-cost contracts as quickly as we can. If they are delayed, it affects productivity and profitability."

Two such contracts for de-gassing stations at Zubair, worth about $1 billion in total, received cabinet approval within minutes, he said. A third contract requires minor follow-up with Eni.

High-value contract items of $500 million or more require the blessing of Iraq's cabinet.

Big Oil has been tapping the prized fields of Zubair, Rumaila - led by BP and West Qurna-1 - run by Exxon Mobil - since 2010 when companies signed a series of service contracts with Baghdad.

Red tape and poor infrastructure as well as increasing security concerns have frustrated their efforts ever since they started to drill.

The Iraqi official said Baghdad had inherited an elaborate process for approving contracts that needed to be shortened. But he said hold-ups had also occurred because, in some cases, the cost of the contracts appeared to be inflated.

For more information about related Opportunities and Key Players visit Iraq Oil and Gas Projects


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