Foreign oil company compounds in Iraq are still subject to attacks by insurgents, says an ExxonMobil executive, whose company is developing an oil field near Basra.
His comments come as ExxonMobil is ramping up its presence in Iraq, with 120 staff now on the ground to drive forward the expensive development of the oil field to meet the ambitious targets set out in the contract and avoid financial penalties.
“The big issue in the Basra area is security. Especially for US companies, we have a compound and its almost like a warzone with rockets being fired,” says Michel Gouzerh, chairman and chief executive officer of ExxonMobil Middle East Marketing Corporation.
“It is still a very difficult environment, but its improving,” he adds.
The US company was in 2009 awarded rights of the West Qurna-1 field. ExxonMobil is the lead contractor in the project with a 60 per cent stake, state-owned South Oil Company holding 25 per cent, and UK-Dutch Shell 15 per cent. ExxonMobil has pledged to invest a total of $50bn into the field.
ExxonMobil agreed to increase production from initial levels of 270,000 barrels a day (b/d) to 2.25 million b/d within seven years.
International oil companies face penalties if they are unable to ramp up production to the agreed targets.
Iraq’s government has set ambitious targets for increasing production, hoping to boost output to 12 million b/d by 2017, which many experts consider unrealistic.
According to Gouzerh, international companies are attracted to Iraq’s potential in spite of the risks.
“Everyone is betting,” he says. “If there is both good governance and good revenue, you can image what Iraq will be like five years down the road?”
Oil revenues would spark a revival of the downstream industry, says Gouzerh, with refineries and base oil production coming back online.
“You can hope for a great future with great money, or the situation can go south and turn into civil war to a point when companies wouldn’t be able to operate,” says Gouzerh.