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Contract Snags & Iran Tensions Hits $53 Billion Iraq Deal Of Exxon: Reuters

Contract Snags & Iran Tensions Hits $53 Billion Iraq Deal Of Exxon: Reuters
A host of issues surrounding contracts and concerns over security because of the increasing tensions between the United States and Iran has created uncertainty about the execution of a $53 billion project to increase oil output at the southern fields of Iraq by the US energy giant ExxonMobil even though the company was poised to start the project just weeks ago. This project was being described to be one of the major ones in the history of the company. This was reported by the news agency Reuters based on information from sources in the Iraqi government.
The report quoted the Iraqi government sources claiming that the way Exxon intended to get back the costs towards development of the two oil fields where in the company wanted to share the oil produced by two fields. This proposal has been opposed by Iraq because this arrangement infringes on the state ownership of production. The sources said that this was the main point of contention between the company and the government. No agreement was signed by the Iraqi negotiators that contained the current terms proposed by Exxon, said the report.
There was no comment made by ExxonMobil on the issue. A spokeswoman for the company situated in Texas said: “As a matter of practice, we don’t comment on commercial discussions.” On the other hand, Fayadh Nema, the Iraqi deputy oil minister for upstream affairs, said that talks between the two parties were ongoing and a striking of a deal soon is expected by him.
The speed of negotiations were also affected following incidents of evacuations of Exxon staff from Iraq in two separate incidents because of the increasing tensions between the US and Iran in the region. The first such incident happened in May when unspecified security threats from Iran forced the evacuation of hundreds of US embassy staff because Iran supports a number of Shi’ite armed groups in Iraq. The second incident happened earlier in this week after a rocket attack that is believed to be targeted at the company and the local security agencies put the blame of the attack on Iran-backed militias.
There has been no comment on the attacks by Tehran. However the two incidents highlight the insecurity that is hindering business in Iraq because of the US-Iran tensions which seem top get more persistent as weeks and months go by.
There are very few countries that have friendly relations with both Washington and Tehran while Washington and Tehran are arch rivals. 
The limit of American power in Iran’s smaller neighbor is reflected by the stopping of the negotiations and disruptions to its staffing, said many Iraqi officials. They also pointed out a number of security incidents which includes the untraced attacks on oil tankers in the Gulf, because of the US-Iran tensions
“Exxon pulled its staff from Iraq in response to regional unrest. The question is how they will run a $53 billion project with constant regional instability,” said an Iraqi oil official who oversees foreign companies’ operations in the south, reported Reuters. “They might abandon work again and that will hurt our energy sector.”

Christopher J. Mitchell

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