Eni Operations in Iraq

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History

Eni began carrying out engineering studies in various oilfields on behalf of the Iraqi Ministry of Oil in the 1980s. In 1992 the oil ministry signed production sharing agreements (PSA) with several international oil companies (IOCs) to develop oilfields in the country. Eni negotiated a PSA for the Nasiriya oilfield and in 1997 signed a memorandum of understanding (MoU) regarding the field; but this agreement was never followed through due to UN sanctions imposed on the country.[1] Eni began operating in Iraq once again when awarded a service contract for the Zubair deposit during the 2009 bidding rounds, following Saddam Hussein's fall from power in 2003.[2]

In August 2012, Eni CEO Paolo Scaroni said the company did not plan to compromise its business in Iraq by making energy deals with the country's semi-autonomous Kurdistan region.[3] Nevertheless, in October 2012 the Wall Street Journal reported that Scaroni said Eni was less enthusiastic about Iraq than when it first began operations in the country, and that the government in Baghdad should consider why some global companies are going to Kurdistan. "Our adrenaline rush now is not what it was when we entered Iraq," Scaroni said according to the Wall Street Journal. "Iraq is more complex than we first thought." Scaroni added that Eni's issues with Iraq are its high bureaucracy, limited energy infrastructure and the political situation with the Kurdistan region, which follows its own policy when it comes to hydrocarbon activities.[4]

As of October 2012 Eni had invested between US $4 billion and $5 billion in its Iraqi activities out of the planned $18 billion.[5]

Activites and Contracts

Zubair

The Zubair contract area is located in Missan province about 20 kilometers southwest of the city of Basra in southern Iraq.[6] In 2009, Eni was part of a consortium including Occidental and Kogas which won the contract to develop Zubair. Eni holds a 32.81% stake, while Occidental Petroleum holds 23.44%, Kogas 18.75% and Iraq's state-run Missan Oil Company the remaining 25%.[7]

Production at the Zubair field increased from 183,000 bpd to more than 201,000 bpd in 2010.[8] In November 2011, Eni signed a preliminary agreement for a $240 million project to drill 22 oil wells and more than double production at Zubair, pending approval from the Iraqi oil ministry.[9] Zubair pumped oil at an average rate of 270,000 bpd in August 2012.[10]

The service contract has a duration of 20 years, and as part of the contract the consortium was due to pay the Iraqi Oil Ministry $300 million as a refundable five-year loan, instead of paying a signature bonus as was the case in other deals made in the second licensing round in December 2009.[11] Development of Zubair pushed up Eni's estimates for global investment to approximately US $72 billion in the 2010−2013 time frame, an increase of 8% from the 2009−2012 plan,[12] with target production expected to be progressively reached by 2016 and maintained for seven years thereafter.[13]

The deal has the potential to be extended to 25 years and the consortium plans to increase the field's production to 1.2 million barrels per day (bpd) from 2010 levels of 185,000 bpd.[14] Eni had originally proposed a remuneration fee of over $4 a barrel, but agreed to accept $2 a barrel after BP accepted the same for the Rumaila field in November 2009. A November 2009 article in Business Week reported that an Eni representative said that clarifications from Iraq on tax-related issues were critical in the decision to accept a lower price.[15]

In September 2012 Eni awarded a $359 million pipeline deal at Zubair to a joint venture between Italy’s SICIM and Dubai-based contractor Drake & Scull International.[16]

Nasiriya

During a 2011 meeting with Iraqi PM Nouri al-Maliki, Eni CEO Paolo Scaroni commented that his company was interested in participating in the upcoming bidding round for development of the Nasiriya field, according to UPI.[17]

References

  1. Iraq: Exploration and Production Eni, retrieved 9 December 2011
  2. "Eni awarded the license for the Zubair giant field in Iraq" Eni website, retrieved 15 November 2012.
  3. "Eni has no plans for Kurdistan oil deals: CEO" Reuters, 20 August 2012.
  4. "Eni's CEO: Enthusiasm Waning for 'Bureaucratic' Iraq" Wall Street Journal, 31 October 2012.
  5. "Eni's CEO: Enthusiasm Waning for 'Bureaucratic' Iraq" Wall Street Journal, 31 October 2012.
  6. "Zubair" Iraq Energy, retrieved 14 November 2012.
  7. Eni Consortium Finalizes Deal to Develop Iraq Oil Field The Wall Street Journal, 25 January 2010s
  8. ENI chief meets Iraq's prime minister UPI, 27 September 2011
  9. Eni Signs $240 Million Iraq Oil-Wells Agreement, Official Says Bloomberg, 3 November 2011
  10. Eni awards $359m pipeline contract at Zubair ArabianOilandGas.com, 18 September 2012.
  11. "Eni Consortium Finalizes Deal to Develop Iraq Oil Field " The Wall Street Journal, 25 January 2010s
  12. | Eni Gains Momentum in Iraq Zacks Investment Research, 26 May 2010.
  13. Eni Consortium to Redevelop Zubair Field in Iraq Rigzone News, 22 January 2010.
  14. "| Eni Consortium Finalizes Deal to Develop Iraq Oil Field The Wall Street Journal, 25 January 2010.
  15. Why Oil Majors Are Coming Back to Iraq Business Week, 4 November 2009.
  16. "Eni awards $359m pipeline contract at Zubair" ArabianOilandGas.com, 18 September 2012.
  17. " ENI chief meets Iraq's prime minister" UPI, 27 September 2011

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