ExxonMobil exits Iraq seawater facility

09 April 2012

Further delays expected at plant that will transfer 2.5 millions barrels-a-day of seawater to oilfields

The withdrawal of US oil major, ExxonMobil from in the development of a giant seawater processing facility has threatened to cause further delays to the scheme, with a possible knock-on effect on oil production in the south of Iraq.

ExxonMobil is understood to have quit its leading role in the Common Seawater Supply Facility (CSSF) at the end of February following disputes with the Oil Ministry over the tendering process for project, a source close to the scheme tells MEED.

The facility is intended to produce 2.5 million barrels-a-day (b/d) of treated seawater from the Gulf, with eventual expansion up to 12 million b/d to be injected into fields awarded in Iraq’s first and second oil licensing rounds.

Preliminary work has stopped, and no contracts have been signed for design work on the facilities two main packages; a water treatment plant, and a 120-kilometre pipeline.

ExxonMobil could not be reached for a comment.

“There has been no progress on the design work and no dialogue between Exxon and the Oil Ministry. It is unclear if one of the other oil majors, like [the UK’s] BP will step in to take over, although that is what the Oil Ministry would prefer”, says the source.

The Oil Ministry has tried to convince the oil firms involved in to the scheme to use a consultant to manage the project from beginning to end, rather than pushing ahead with what it sees as a slower process of awarding pre-front end engineering and design (feed) contracts, followed by separate feed contracts.

Industry sources in Iraq have also linked the firm’s exit with the ongoing dispute between Federal government in Baghdad and autonomous Kurdistan Regional Government (KRG), with ExxonMobil caught in the middle.

In November 2011, the KRG revealed that it had signed six production sharing contracts with ExxonMobil. Baghdad promptly threatened to remove ExxonMobil from its contract for the development of the West Qurna Phase-One oil field in the south of Iraq.

US engineering firm Fluor was leading the data gathering and survey work for the main utilities package, including water intake and pumping stations at an as yet undetermined location in Basra.

The UK’s Mott MacDonald is carrying primary surveys for the water pipelines from the facility, along with theoretical and conceptual studies.

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