Chevron Pursues Exploration Deal in Iraq--Update
By Benoit Faucon in London, Isabel Coles in Beirut and Michael R. Gordon in Washington
Chevron Corp. is in talks to invest in one of Iraq's large oil
fields, according to people familiar with the situation, providing
a vote of confidence in the country's energy industry despite years
of instability and start-and-stop foreign investment.
Chevron and the Iraqi government tentatively plan to sign a
memorandum of understanding to develop one of Iraq's large oil
fields in the south of the country, according to these people. The
preliminary deal, if it is consummated, could be announced later
this week during a planned visit to Washington by Iraq's new prime
minister. He is expected to meet President Trump on Thursday.
Any deal would be limited in scope -- calling for an investment
on the scale of hundreds of millions of dollars once it is
finalized, according to these people. That is a relatively small
commitment for an oil company the size of Chevron, but it comes at
a time when the entire industry has scaled back spending sharply
amid a steep drop in oil prices. Oil demand has fallen dramatically
amid pandemic lockdowns and economic uncertainty.
Chevron's discussions focus on carrying out exploration work in
the Nassiriya field, which is estimated to hold about 4.4 billion
barrels of crude, according to the people familiar with the matter.
The field isn't one of the country's easiest to explore. It
requires the sort of complex technologies that big, international
oil firms like Chevron can provide, these people said.
The global oil-and-gas industry is in a deep retrenchment after
the coronavirus pandemic dramatically lowered demand for
hydrocarbons. The sector's largest companies have announced layoffs
and cut billions of dollars from capital budgets. Chevron said
earlier this year it would cut its spending by $4 billion, or 20%.
It plans to lay off as much as 15% of its staff.
Still, Chevron has shown a willingness to spend despite the
market uncertainty. It entered the pandemic with a relatively
strong balance sheet and in July agreed to buy Noble Energy Inc.
for about $5 billion, in what would be the largest oil-patch tie-up
since the pandemic took hold.
A Chevron spokeswoman said the company doesn't comment on
matters of a commercial nature. A spokesman for the Iraqi oil
ministry didn't return a request for comment.
New Iraqi Prime Minister Mustafa al-Kadhimi is set to meet Mr.
Trump on Thursday to discuss the pandemic, the fight against
terrorism and other issues, including energy cooperation, the White
House has said.
Chevron's decision to plow ahead with a new project in Iraq
underscores that country's longtime lure for big oil companies. As
with some of its Mideast neighbors, including Saudi Arabia, Iraqi
crude is often relatively easy and cheap to tap. That has spurred
interest among the world's biggest oil companies, but that
enthusiasm has long been tempered by the country's political
Baghdad opened its fields up to foreign investment in the
aftermath of the U.S.-led invasion of Iraq in 2003. What followed
were years of political instability and what industry officials
have sometimes deemed unattractive terms offered by successive
More recent attempts by foreign firms to enter the country --
the fastest-growing oil producer in the Middle East -- have been
stymied by a fresh wave of popular unrest and tensions between
Baghdad and Washington.
Starting in October, protests against perceived corruption and
mismanagement spilled into the streets. That triggered the
resignation of the cabinet of former Prime Minister Adel
Abdul-Mahdi in December. He agreed to stay as a caretaker but was
unable to make key decisions. Iraqi relations with the U.S. also
frayed in January after the killing of a top Iranian general by
Washington in Baghdad.
In May, the Iraqi parliament appointed intelligence chief
Mustafa al-Kadhimi as prime minister. He has maintained friendly
relations with Washington. New Oil Minister Ihsan Ismaael was
anointed the next month, prompting U.S. companies to restart talks
to get business in the Iraqi oil sector, the people familiar with
the matter say.
Exxon Mobil Corp. has also restarted talks for another stage of
its West Qurna 2 oil-field development in Iraq, people familiar
with the matter said. But the U.S. oil giant hasn't made progress
in discussions to move ahead with its much-bigger Iraq bet, called
the South Integrated Project, according to these people. The
years-old project involves oil extraction, pipelines and water
management. An Exxon spokesman said it is closely monitoring the
Write to Benoit Faucon at firstname.lastname@example.org, Isabel Coles at
email@example.com and Michael R. Gordon at
(END) Dow Jones Newswires
August 17, 2020 16:56 ET (20:56 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Gráfica de Acción Histórica
De Sep 2020 a Oct 2020
Gráfica de Acción Histórica
De Oct 2019 a Oct 2020