Chevron Starts Work On Iraq Field Development Deal

By Irina Slav - Aug 20, 2018, 9:30 AM CDT

U.S. supermajor Chevron has started work on a preliminary contract with the Iraqi government for the development of oil fields in southern Iraq, Reuters reports, citing Iraq’s Oil Ministry. The memorandum of understanding that gave Chevron the rights to explore for oil in the fields that are owned by Basra Oil Company and Dhi Qar Oil was inked in June.

Under the terms of the contract, Chevron will survey and study the fields, and build production facilities to help the two Iraqi state-owned companies boost their operational and financial performance.

This would be the first major deal for Chevron in Iraq, although the company has a presence in the autonomous region of Kurdistan, which it had to leave last year after an ill-fated independence referendum led to the central Iraqi government taking control of Kirkuk and the surrounding fields from the Kurds.

Chevron returned to Kurdistan in February this year. The company has an 80-percent stake in the Sarta block, where it began drilling one appraisal well last year. Drilling was completed in the second quarter of this year.

Iraq boasted an increase in crude oil production to 4.46 million bpd last month, although the figure reported by OPEC secondary sources was lower, at 4.36 million bpd. This was the second largest increase within the cartel for June, after the Saudi production jump of 405,400 bpd, according to the secondary sources—the ones that OPEC uses for calculating quotas and compliance. Iraq also said that its crude oil exports in July hit their highest level since January 2017—at 3.875 million bpd, up by 25,000 bpd from June.

Iraq is the second-largest exporter of crude oil in OPEC but it has struggled to boost its production further as it tries to resurrect its economy, embattled by the war and the fight against Islamic State.

By Irina Slav for Oilprice.com