Exxon Mobil, Shell Take a Calculated Risk

A consortium led by Exxon Mobil and Royal Dutch Shell on 25 January signed a contract with the Iraqi government to redevelop and expand the West Qurna field – one of Iraq’s biggest oil fields. The Exxon team said it would boost production at the field to 2.325 million barrels a day, up from just 279,000 barrels a day currently. The field has estimated reserves of 8.7 billion barrels. Exxon, which is the operator of the project, has the bigger stake in the venture with 80%, while Shell holds the remaining 20%.

“I am happy to conclude this contract with these two major companies to develop the giant West Qurna oil field,” Iraqi Oil Minister Hussein al-Shahristani was quoted as saying by the press at the signing ceremony in Baghdad.

However, Iraq has been witnessing violence-related incidents frequently since the 2003 US-led invasion of the oil-rich country. Rainer Winzenried, a Shell spokesman, told New Europe on 26 January that “security is a concern. It was also in the past when we engaged in Iran.” He noted that the company would take additional precautions and “would not risk of risk the life of employees in the future so we have to be very careful.”

Winzenried reminded that Shell is now involved in three projects in Iraq – two oil fields and one gas field. “West Qurna is the third project. All and all it can become an important part in our portfolio,” he said.

Iraq hopes the contracts will make Iraq among the largest oil producers in the world. Iraq, which relies on the 2.5 million barrels per day it produces for more than 90% of its government revenue and about 60% of its gross national product, landed key deals during its second round of postwar oil auctions in December. On 22 January, Iraq signed a contract with a consortium led by Italy’s Eni to develop the giant al-Zubair oil field in the southern province of Basra. The signing follows an agreement reached last year between the oil ministry and Eni to develop the four-billion-barrel oil field.

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