Sonangol to quit Iraq oil developments

27 February 2014

Angolan firm had been operating the Najma and Qayyara oil fields

Angola’s Sonangol has announced its plans to withdraw from two oil developments in Iraq, citing ongoing security problems in the country.

The state-owned firm was awarded two technical service contracts in 2009 for the development of the Najma and Qayyara heavy oil fields in the northwest of Iraq, but has been unable to push ahead due to the security risks in the Ninewa province.

“Our presence in Iraq was as an operator in an area with much conflict. Last year we were unable to develop any work due to security matters… and so we took the decision to leave,” says Anabela Fonseca, a Sonangol board member in charge of international investments, Reuters news agency reports.

Sonangol declared force majeure at the Najma oil field, following the first major attack on upstream activities in January 2012, forcing the developer to suspend its operations.

Kuwait Energy has also cited security as a major issue at its developments in Iraq. The privately owned firm is developing the Siba gas field in the southern Basra province and the Mansuriya gas field in the eastern Diyala province.

At MEED’s Iraq Energy Projects conference on 26 February, a company official complained that projects at the Mansuriya field were costing three times as much as equivalent projects at Siba due to security. The Mansuriya projects were also delayed due to the paucity of bids received as contractors were reluctant to work in the more restive areas of northern Iraq, compared to the relative security of Basra.

“Would it not be better to put these projects on hold until security improves?”, one audience member asked during a panel session. Thamir Ghadban, the chairman of the prime minister’s advisory committee responded that the Oil Ministry’s approach was to be patient with firms facing these problems.

“Sonangol had issues and they [the Oil Ministry] have given them more time. We should not opt to suspend projects. Hopefully things will improve”, said Ghadban.  

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