By John Lee.
Shafaaq reports that Iraq will pay foreign oil companies about $2 billion in remaining arrears for 2015 in April.
The arrears were accumulated to international oil companies (IOCs) such as BP, Shell , ExxonMobil, Eni and Lukoil, which operate in under service contracts, whereby they are paid a fixed dollar fee for additional volumes produced.
Deputy Oil Minister Fayadh al-Nema, who is in charge of upstream operations, told Reuters that amended contracts could be in place by the middle of the year, which would ease the pressure on Iraqi finances.
He added that one way to reduce companies’ costs was to hand drilling operations over to the state-run Iraqi Drilling Company (IDC), while another was to replace foreign workers with locals.
Iraq’s output rise in 2016 will be “very modest,” Nema forecast, due to the shrinking investment budgets of foreign contractors, which are affected by the drop in oil prices.
Nema said a deal with PetroChina, ExxonMobil and other energy companies could be reached by the end of the year over investing in a project to boost output from its smaller southern oilfields.
The multi-billion dollar “Integrated South Project” consists of building oil pipelines, storage facilities and a seawater supply project to inject water from the Gulf to maintain pressure and enhance oil recovery.
Investing companies will help raise production from the Artawi and Nahr Bin Umar oilfields and build energy infrastructure. Revenues from rising output from the two oilfields will be used to repay investors, Nema said.