Oil Majors are Coming Back to Iraq

Businessweek: In June many of the world’s biggest energy companies walked away from bidding on potentially rich oil fields in Iraq. While they liked the billions of barrels of reserves that were on offer, ENI, ExxonMobil, Royal Dutch Shell, and others balked at the tough terms the Iraqis were proposing.

Today they’re coming back—and getting roughly the same deal that was on the table during the summer. On Nov. 2, ENI initialed a contract to boost production in the Zubair field near Basra, which it estimates has 6 billion barrels of reserves. Shell, Exxon, and ConocoPhillips also are in talks that could help boost Iraq’s oil production to more than 6 million barrels per day—behind only Saudi Arabia in OPEC. "This is the window in which if anything can happen it will happen," says Alex Munton, an Iraq specialist at Edinburgh-based energy consultants Wood Mackenzie.

The big oil companies are reconsidering Iraq because they realize this may be among their last opportunities to get large volumes of crude.

My comment: The last sentence is interesting in that it is a validation of the peak oil theory. If so much oil exists around the world why do these majors need to accept the relatively low returns being offered by the Iraqi government. the answer of course is that new oil finds of significant size simply do not exist.

On another note I was able to pick up some more WesternZagros shares at around seventy cents per share. I would again note that this is a highly speculative stock.

John Polomny
The Real Deal