Exxon Spearheads Iraqi Water-Injection Project

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(Dow Jones), Apr. 19, 2010

U.S. oil major Exxon Mobil Corp. will be the leader of a multibillion joint water-injection project planned to be set up in southern Iraq to help offset a water problem facing oil-field development, a senior Iraqi oil official said Monday.

The project would produce between 10 million and 12 million barrels of water a day that would be injected in six oil fields which Iraq recently awarded to international companies, Abdul Mahdy al-Ameedi, head of the Iraqi oil ministry's Petroleum Contracts and Licensing Directorate, told Dow Jones Newswires.

ExxonMobil is the operator of Iraq's supergiant West Qurna phase 1 oil field.

"We are now having a problem to secure water from the Tigris and Euphrates rivers because water flow in both are declining," Ameedi said. The new plant, which will be built in the southern Basra governorate, would process water from the nearby Persian Gulf.

U.K.-based Gaffney Cline and Associates will provide consultancy on the project as well as handling commercial and contractual issues associated with the plan, Ameedi said.

Other companies which are expected to join forces with Exxon, are Royal Dutch Shell PLC (RDSA), operator of Majnoon oil field, Eni SpA (E), operator of Zubair, Russia OAO Lukoil Holdings (LKOH.RS), operator of West Qurna Phase 2, China National Petroleum Corp., operator of Halfaya, and Malaysia's Petronas, operator of Garraf.

The aim of the joint project is to cut costs, Ameedi said.

Officials from ExxonMobil weren't available to comment.

Ameedi expects the project to be completed in two to three years' time when these oil fields should start large-scale crude oil production.

Iraq, which sits on the world's third-largest oil reserves, signed 10 major oil deals last year and earlier this year with the aim of boosting its crude oil production to around 12 million barrels a day in six to seven years from now. Iraq currently produces only 2.4 million barrels a day.

Copyright (c) 2010 Dow Jones & Company, Inc.

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