Global energy markets witnessed a significant development with the announcement last week of the signing of a memorandum of understanding between US energy giant ExxonMobil and the Iraqi Ministry of Oil, in what is one of the most notable recent deals between Western companies and Baghdad. The move comes years after the company's withdrawal from Iraq, which at the time was the most notable Western withdrawal from the country, particularly from the Combined Seawater Shared Services Project (CSSP) and the giant West Qurna 1 oil field.
Reasons for the previous withdrawal
According to analysts, ExxonMobil's previous withdrawal was mainly related to the breakdown of trust between the company and the Iraqi Oil Ministry, especially with regard to questionable commission practices that could be classified as bribes by Western standards, as well as the uncertainty of local law and the security risks of the projects. This subsequently led to the withdrawal of other Western companies from Iraq.
Transparency International has identified Iraq as among the most corrupt countries, due to embezzlement, money laundering, oil smuggling, and bureaucratic bribery, which has negatively affected political stability and the state's ability to deliver services.
ExxonMobil's Terms of Return
Iraqi and US sources confirm that ExxonMobil's new return is accompanied by high-level guarantees from the Iraqi government, including three key elements:
Cohesion: Ensuring that the infrastructure associated with the projects is delivered according to plan.
Security: Protecting people and ensuring adherence to legal and business practices.
Streamlining: Ensuring that any agreement is implemented regardless of any future government changes.
All warranties have been thoroughly scrutinized by top U.S. legal and accounting advisors to ensure that the company's interests and U.S. reputation are protected.
New projects: Majnun field
ExxonMobil will begin its new activity in Iraq with the development of the giant Majnoon oil field, one of the largest oil fields in the world, with an estimated reserve of 38 billion barrels.
This field is characterized by:
part of the Southern Gas Project run by Total Energies, opening up opportunities for cooperation between the two Western giants.
One of four major fields in southern Iraq targeted to achieve a long-term production target of 7 million barrels per day.
A shared field with Iran, ExxonMobil's presence acts as a deterrent to Iranian oil passing through Iraq to avoid international sanctions.
Importance of return
ExxonMobil's return is not just a business deal, but a political and economic signal of the West's desire to reassert its influence in Iraq and the region. It is also an important step in ensuring transparency and legal security in the Iraqi oil industry, and enhances Baghdad's ability to attract foreign investment without risking the reputation of major companies.
Conclusion
ExxonMobil's return reflects strategic shifts in the Iraqi oil industry after years of Western withdrawal, and opens the door for more cooperation between Iraq and major international companies, boosting oil production and stabilizing regional and international markets.
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