Oil Companies Warn of Development Delays

May 17, 2016

A senior Iraqi oil official has told*Reuters*that international oil companies (IOCs) have warned of delays to projects to increase its crude oil output if the Iraqi government insists on drastic spending cuts this year.

Investments by IOCs are repaid with crude oil, which has become a problem since oil prices have fallen and Iraq has been struggling to find enough oil to repay the companies for their investments.

Due to budgetary pressures, Iraq has asked IOCs to cut their development budgets for a second year, but the two sides have failed so far to agree on spending levels.

BP*has been asked to cut its 2016 budget forRumaila*to $2.48 billion, and to target output of 1.4-million barrels per day. (BP proposed a budget of $3.25 billion for 2015).

Lukoil*is expected to cut spending to $1.26b illion and aim for a production of 400,000 bpd at*West Qurna 2*project; it proposed a 2015 budget of $2.1 billion.

Eni*should cut spending to $1.62 billion and aim for production of 351,000 bpd at*Zubair.

ExxonMobil*was asked to slash spending to $878 million and aim for output of 379,000 bpd at*West Qurna 1. Last year, according to Reuters, it “insisted” on spending $1.8 billion.

Shell*should cut spending to $855 million and aim for 200,000 bpd from*Majnoon. Last year, it proposed a budget of $1.5 billion.

Petronas*should reduce costs to $712 million and target production of 100,000 bpd atGarraf.

(Source: Reuters)