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Page added on December 16, 2009

Oil companies Shell, Petronas face up to problems in Iraq

“Major infrastructure constraints” are one of the key factors at play for foreign oil companies Shell and Petronas face going through the licensing rounds to develop oil fields in Iraq, according to Jonathan Wood, global issues analyst specialising in oil and gas at risk consultancy Control Risks.

A joint venture (JV) between Royal Dutch Shell and Malaysian oil and gas company Petronas was successful in its bid to develop a 12 billion barrel oil field in Iraq. Russian oil company Lukoil won the rights to develop a 12.9 billion barrel with Norwegian partner Statoil on December 11 and 12.

There has been little investment in Iraq’s oil sector since the 1980s, and much of the infrastructure and industry remains in a state of disrepair due to conflict with Iran and the subsequent conflict with a US led coalition in the 1990s, as well as a decade of UN sanctions.

“These companies will face constraints both in terms of pipelines and terminals to get oil out of the country but also the state of utilities and roads in the south of Iraq,” says Wood.