Crisis Forces IOCs to Rethink Iraq Plans

摘要

Low prices and deep Opec-plus production cuts have dealt Iraq’s oil industry a hammer blow. Oil Minister Ihsan Ismael insists the country is open for business, that activity will pick up next spring and that Iraq’s long-held production target of 7 million barrels per day can be realized within seven years (PIW Sep.11’20). The reality is that the fast-changing priorities of many oil firms, Baghdad’s failure to overhaul its unattractive fiscal regime and the severe financial squeeze in Iraq are putting key projects at risk. At least two big investors are getting cold feet, including Russia’s Lukoil, which is now considering downsizing its plans for the giant West Qurna-2 field by abandon-ing the development of the Yamama formation, with sources saying it has presented the proposal to the state-run Basrah Oil Co. (BOC). The project was supposed to add 380,000 b/d of production, taking the field’s output to 800,000 b/d in 2025, under a development plan signed with Baghdad in 2018. Lukoil’s hesitation stems partly from the project’s poor economics after it drilled three wells last year, and partly from the huge sums it is owed in arrears payments. “Officially, the Iraqis want to proceed with raising the field’s production capacity. But on the other hand, they are budget cutting,” says an Iraqi source. Talks between Lukoil and the oil ministry are ongoing, and no final decision has been taken.