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PetroChina and ExxonMobil in $53 billion Iraq megaproject

Prime Minister Adel Abdul-Mahdi of Iraq has announced the country’s intention to work with oil majors ExxonMobil and PetroChina to take seawater from the Persian Gulf and use it to boost oil production in the country’s oil fields around Basra in the southern portion of the country.

While the investment will cost around $53 billion over 30 years, according to Prime Minister Abdel-Mahdi, it will generate some $400 billion in revenues over its lifetime. The prime minister also said:

“This is an enormous project and will produce tens of thousands of jobs.”

The prime minister also said the broad principles had been agreed with PetroChina, the listed affiliate of state-owned China National Petroleum Corporation, and ExxonMobil, the US oil major that also supplies Mobil distributors. He added that his cabinet had set the oil ministry the task of finalizing the agreement, and when questioned by Reuters about a likely date for this, he replied:

“Talks now between the oil ministry and Exxon Mobil and PetroChina are focused on how to split profits if oil prices rise or decline.”

The deal will involve building a water supply network to the southern oil fields, where it will be injected to increase the subterranean pressure, which has diminished over decades of production. This should keep production steady, but the water needs to be deoxygenated, cleaned, and almost entirely desalinated first. The deal will also involve capturing and processing up to 100 million cubic feet of natural gas that is currently lost to flaring from the two affected fields.

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