x Abu Dhabi, UAEMonday 24 July 2017

BP looks to Iraq's south for growth

Energy firm is keen to expand its operations in Iraq at a time when many of its peers are striking deals with the autonomous region of Kurdistan.  

BP's chief executive Robert Dudley (second left) arrives for the Abu Dhabi International Petroleum Exhibition and Conference (Adipec) at the Abu Dhabi National Exhibition Center. Ben Job / Reuters
BP's chief executive Robert Dudley (second left) arrives for the Abu Dhabi International Petroleum Exhibition and Conference (Adipec) at the Abu Dhabi National Exhibition Center. Ben Job / Reuters

BP is keen to expand operations in Iraq at a time when many of its peers are striking more deals with the country's autonomous region of Kurdistan.

"We absolutely remain committed to Iraq," said Bob Dudley, the chief executive of the British oil giant, which is increasing production at the Rumaila supermajor field in the south.

"We're meeting the leadership of the country about it, and exploring other areas of cooperation, but it's too early to talk about anything specific."

Other oil majors - notably ExxonMobil - have strained relations with the central government in Baghdad by signing contracts with the Kurdistan regional government (KRG) to explore for oil in the northern Iraqi region.

BP's former boss Tony Hayward blazed a trail by heading the first larger oil company to enter Kurdistan, and Genel Energy, of which he is the chief executive, is already producing oil there.

Mr Dudley made it clear that he will not steer his company in the direction taken by his predecessor, and yesterday he told The National that BP would not exit southern Iraq in favour of Kurdistan.

Baghdad has repeatedly threatened to throw Exxon out of mainland Iraq, and according to media reports last week the American company is seeking buyers for its stake in the massive West Qurna 1 project.

"Exxon has started negotiations with companies, and it has set December to receive bids from them," said Hussain Al Shahristani, Iraq's deputy prime minister for energy affairs. "We are expecting the sale to be finalised by the end of this year."

France's Total and Chevron of the United States have also struck deals with the KRG. The international oil companies operating in Iraq are dissatisfied with the remuneration offered in the technical service agreements they work under.

The oil reserves in Kurdistan are believed to be easily extractable, and the production-sharing agreements offered by the KRG are more profitable than Baghdad's terms.

fneuhof@thenational.ae