Kuwait expects oil price to ease
Kuwait expects oil price to ease
“Markets have witnessed a slight increase recently, but this rise will not last for long as prices will stabilize.
They have already started to ease and return to normal levels,” said Omair, cited by the KUNA news agency.
He attributed the prise rise to violence in Iraq and Libya, both key oil producers and exporters in the Organization of Petroleum Exporting Countries.
Omair said that the violence in Iraq, where militants launched a lightning offensive on June 9, has not impacted crude supplies.
The violence in Iraq has a direct bearing on global crude prices because the country is the second-largest oil exporter in the 12-nation OPEC after Saudi Arabia.
Iraq sits on more than 11 percent of the world’s proven resources and produces 3.4 million barrels a day.
Militants have overrun swathes of territory there, but have so far yet to directly threaten the key oil-producing region in the south.
In Libya, where a NATO-backed uprising in 2011 toppled and killed former dictator Muammer Qaddafi, tensions were raised when a rogue former general began a campaign in May to rid the eastern city of Benghazi of radicals, drawing many regular army units to his cause.
Oil prices edged higher in Asia on Wednesday as dealers await the release of a US stockpiles report for clues about demand in the world’s top crude consumer.
US benchmark West Texas Intermediate for August delivery rose 10 cents to $105.44, and Brent crude gained nine cents to $112.38 in afternoon trade.
Exxon faces setback in Iraq as oil and water mix
- Exxon’s talks with Iraq on water project hit problems
- Losing the contract could deal a blow to Exxon’s broader Iraqi plans
LONDON: Talks between Exxon Mobil and Iraq on a multibillion-dollar infrastructure contract have reached an impasse, Iraqi officials and two industry sources said, in a potential setback to the oil major’s ambitions to expand in the country.
More than two years of negotiations on awarding the US firm a project to build a water treatment facility and related pipelines needed to boost Iraq’s oil production capacity have hit difficulties because the two sides differ on contract terms and costs, the officials and sources told Reuters.
Unless the differences can be resolved, the project could be awarded to another company in a tender, the officials said, without elaborating on the points of dispute.
Losing the contract could deal a blow to Exxon’s broader Iraqi plans, as it would be handed rights to develop at least two southern oilfields — Nahr Bin Umar and Artawi — as part of the deal.
Exxon declined to comment.
Further delays to the project could also hold back the oil industry in Iraq, OPEC’s second-largest producer; the country needs to inject water into its wells or risk losing pressure and face severe decline rates, especially at its mature oilfields. As freshwater is a scarce resource in Iraq, using treated seawater is one of the best alternatives.
The Common Seawater Supply Project (CSSP), which would supply water to more than six southern oilfields, including Exxon’s existing West Qurna 1 field and BP’s Rumaila, was initially planned to be completed in 2013 but has now been delayed until 2022.
“The CSSP would be expensive and challenging but there’s opportunity here (for Exxon) ... to get access to resources on a very large scale and to achieve something and really make a difference to its own business,” said Ian Thom, principal analyst at consultancy Wood Mackenzie.
Many of the world’s biggest oil companies, such as BP, Total, Royal Dutch Shell and Eni, have operations in Iraq, where a low-return environment and strict contract terms have squeezed returns in recent years.
With total oil production at West Qurna 1 at around 430,000 bpd, Exxon’s presence in Iraq is small compared with dominant player BP whose Rumaila oilfield accounts for around a third of the country’s total production of about 4.4 million bpd.
While the Texas-based firm is looking to grow in Iraq, its geographical focus remains on the Americas, including US shale fields and Brazil, in contrast to rivals such as France’s Total and Italy’s Eni who have been significantly expanding their activities in the Middle East in recent years.
The talks between Iraqi authorities and Exxon are still ongoing, according to the industry sources and officials from the Iraqi oil ministry.
However the state-run Basra Oil Company (BOC), which is overseeing the project, said it could now tender the project this month in a parallel process with the aim of completing a first phase by 2022.
“We have this one approach but we can have another approach as well,” Abdul Mahdi Al-Ameedi, head of the Iraqi oil ministry’s licensing and contracts office, told Reuters.
Iraq chose Exxon to coordinate the initial studies of the CSSP in 2010. At the time, Baghdad aimed to raise its oil production capacity to 12 million barrels per day (bpd) by 2018, rivalling Saudi Arabia. That target has been missed and been cut to 6.5 million bpd by 2022 from around 5 million bpd now.
Negotiations with Exxon fell through in 2012 due to red tape and cost disputes. In 2015, the company re-entered talks with the oil ministry, this time in partnership with China’s CNPC and with the CSSP folded into a much bigger development project known as the Integrated South Project.
CNPC did not reply to a request for comment.
For Iraq, going down the non-Exxon route raises two major concerns: How to integrate the project between the water treatment facility and the oilfields and how to finance the project, Thom said.
Two Iraqi oil sources told Reuters that taking the non-Exxon path would raise financing concerns for Iraq.
Projected costs of the scheme have not been disclosed, but engineering studies have put the cost of treating 12.5 million bpd of seawater transported to six oilfields at $12 billion.
The capacity has been revised downwards, with the first phase set to have a 5 million bpd of water, and in the second phase an additional 2.5 million bpd of water will be added for additional fields.