ERBIL, Kurdistan Region - Iraq’s Oil Ministry on Wednesday signed a memorandum of understanding (MoU) with US energy giant ExxonMobil to develop the second phase of a seawater utilization project with a capacity of 2.5 million barrels per day (bpd), as Baghdad seeks to bolster oil production and restore pre-war export revenues.
The agreement was signed under the auspices of Oil Minister Basim Mohammed Khudair, “for the second phase of the seawater use project” to supply oilfields with seawater, “compensate for reservoir pressure” and sustain production levels, according to a ministry statement.
The project aims “to attract international companies to develop the oil industry, sustain production operations, and increase production rates, reflecting an attractive environment for implementing promising investment projects."
The agreement comes as Iraq works to restore oil revenues after the US-Israeli war against Iran, which began on February 28, severely disrupted shipping through the Strait of Hormuz, the country’s principal oil export route.
Oil revenues account for at least 88 percent of Iraq's total state revenues with at least 90 percent of its roughly 3.5 million barrels per day transiting the Strait through its southern ports prior to the conflict.
The project will supplement a separate seawater initiative being implemented by French energy company TotalEnergies, which has a planned capacity of five million bpd, the statement read.
The ministry said it holds memorandums of understanding with several US companies, including Chevron and ExxonMobil, to benefit from modern technology and expertise. Khudeir said the projects would also generate employment opportunities for local workers and support the implementation of service projects.
Iraq’s oil exports exceeded 3.4 million bpd in October, approaching pre-war levels of around 3.7 million bpd, Khudair said on Monday. Exports had recovered to approximately three million bpd in September, following a steep decline in March.
Baghdad has sought to mitigate the disruption by diversifying export routes, including resuming shipments of Kirkuk crude through the Kurdistan Region to Turkey’s Ceyhan port and transporting smaller volumes by tanker trucks through Syria.
The government has also pursued measures to increase production capacity and revenues.
Prime Minister Ali al-Zaidi on Sunday called for expanding the country’s oil production capacity and instructed officials to address corruption and negligence that had impeded the sector’s development.
Despite the recovery in export volumes, Iraqi crude has continued to be sold at discounts to compensate buyers for elevated shipping costs and security risks associated with the regional conflict.
