Iraq Signs Deal with China’s Zhenhua Oil as Exxon Mobil Agreement Stalls

Iraqi Oil Minister Jabar al-Luaibi. (Reuters)
Iraqi Oil Minister Jabar al-Luaibi. (Reuters)
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Iraq Signs Deal with China’s Zhenhua Oil as Exxon Mobil Agreement Stalls

Iraqi Oil Minister Jabar al-Luaibi. (Reuters)
Iraqi Oil Minister Jabar al-Luaibi. (Reuters)

Iraq has not yet reached an agreement with Exxon Mobil on a multibillion-dollar project to boost output from several southern oilfields, Oil Minister Jabar al-Luaibi said on Monday.

If no agreement is reached by February, Luaibi told journalists at a signing ceremony for a separate deal, the project would be offered to other companies.

Luaibi had said in October that Iraq was in final talks with Exxon Mobil on developing the project, which consists of building oil pipelines, storage facilities and a seawater supply project to inject water from the Gulf into reservoirs to improve production.

On Monday, the Iraqi oil ministry signed a deal with China’s state-run Zhenhua Oil to develop the southern portion of the East Baghdad oilfield.

The oil ministry expects the costs needed to develop the oilfield could reach $3 billion, said Abdul Mahdi al-Ameedi, who heads the oil ministry’s licensing and contracts office.

Iraq has made significant changes to the new service contract with the Chinese company that links global oil prices and the cost of development, he said.

“It’s a new contract with new amendments which we made to overcome the chokes and lapses in our previous service contracts,” Luaibi told journalists.

The new contact will allow Zhenhua to receive a $3.5 fee for each barrel of crude produced from the oilfield, Ameedi said, and will serve as a model for all upcoming contracts with international companies.

“The East Baghdad contract was drafted in a way to significantly minimize the cost of oilfield developments. This contract will be a model for the following oil deals,” he said.

Iraq plans to utilize 20 million cubic feet of gas produced as a by-product of oil production from the East Baghdad oilfield to supply a nearby power station, Ameedi said.

He said he expects the signing of the East Baghdad final deal to take place in March.

The head of the state-run Midland Oil Company, Jalal Ahmed, told reporters that the increase of crude output from East Baghdad oilfield, which he said was now producing 10,000 barrels per day, will be used to feed a nearby major electricity station near Baghdad.

Jalal also said his company has plans to upgrade production from the Neft Khana oilfield near the Iranian border to 8,000 barrels per day from the current 2,000.

In addition, Luaibi said he was optimistic there would be a balance between supply and demand by the first quarter of 2018, leading to a boost in oil prices.

Global oil inventories have decreased to an acceptable level and there were positive signs that oil market prices would improve significantly in 2018, Luaibi told journalists.

“I am optimistic, and during the first quarter of next year there will be more balance between supply and demand, which will reflect positively on improving global oil prices,” he said.



EU States Agree on 14th Sanctions Package Against Russia

The European Union flag inside the atrium during an EU summit at the European Council building in Brussels, Monday, June 17, 2024. (AP Photo/Omar Havana)
The European Union flag inside the atrium during an EU summit at the European Council building in Brussels, Monday, June 17, 2024. (AP Photo/Omar Havana)
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EU States Agree on 14th Sanctions Package Against Russia

The European Union flag inside the atrium during an EU summit at the European Council building in Brussels, Monday, June 17, 2024. (AP Photo/Omar Havana)
The European Union flag inside the atrium during an EU summit at the European Council building in Brussels, Monday, June 17, 2024. (AP Photo/Omar Havana)

European Union countries agreed on a 14th package of sanctions against Russia over its war in Ukraine, diplomats said on Thursday, including a ban on re-exports of Russian liquefied natural gas (LNG) in EU waters.
Belgium, which holds the rotating EU presidency until July 1, said on the X platform that the package "maximizes the impact of existing sanctions by closing loopholes".
Countries debated the new measures for over a month and ultimately watered down one of the Commission's proposals, aimed at preventing even more circumvention, at Germany's prompting, Reuters reported.
The dropped measure would have forced subsidiaries of EU companies in third countries to contractually prohibit the re-exports of their goods to Russia. The EU is keen to stop the flow of dual-use technology such as washing machine chips that could be used by Russia for military purposes.
An EU diplomat said Germany had asked for an impact assessment, and the measure could be included at a later date.
The ban on trans-shipments is the first restriction the bloc has applied to LNG. However, gas market experts say the measure will have little impact as Europe is still buying Russian gas itself, and trans-shipments via EU ports to Asia represent only around 10% of total Russian LNG exports.
The package also tightens measures against the shadow fleet moving Russian oil outside the price cap on Russian crude set by the Group of Seven (G7) nations. EU countries added tankers to the list of sanctioned entities as well as at least two Russian-owned ships moving military equipment from North Korea, diplomats said.
Overall, 47 new entities and 69 individuals were added to the EU sanctions list, bringing the total to 2,200. The package is expected to be formally approved when EU foreign ministers meet on Monday, diplomats said.