Chevron CVX.N is set to sign memorandums of understanding on Friday with the Iraqi government to advance the U.S. oil major's potential entry into the West Qurna 2 and Nassiriya oilfields, according to a senior Chevron executive.
The company is also continuing talks with Iraq to produce technical studies and evaluate potential pipeline routes to transport crude out of the country and bypass the Strait of Hormuz, the executive said.
The oilfield agreements and pipeline studies are part of a broader push by Iraq's new government to deepen energy ties with the United States. Finding alternative export routes has taken on added urgency as the U.S.-Israeli war with Iran continues to threaten shipping through the strait, a chokepoint for the bulk of Iraq's crude exports.
Pipeline route evaluations continue
The work to evaluate pipelines and bypass the Strait of Hormuz would be crucial as Iraq seeks to raise its oil output and diversify its export routes.
A consortium including Chevron and Qatar's UCC signed an agreement with Iraq's state-owned Basra Oil Company on July 4 to compare potential pipeline routes.
A U.S. State Department official said this week that the Trump administration supports efforts by Iraq and Syria to revive a pipeline between the two countries. The Kirkuk-Baniyas pipeline has been mostly dormant since suffering damage during the 2003 U.S.-led invasion of Iraq.
West Qurna 2 and Nassiriya talks progress
In February, Chevron moved into exclusive talks with Iraq for West Qurna 2, one of the world's largest oilfields that currently produces about 460,000 barrels per day. Iraq nationalized the field earlier this year to avoid disruptions from U.S. sanctions on Russia's Lukoil, which previously operated West Qurna 2.
The preliminary agreement on Friday will progress commercial terms and help lead to a final agreement for Chevron to take over the oilfield, the senior executive said.
Chevron and Iraq also signed an agreement in principle last August to develop the Nassiriya oilfield project that consists of four exploration blocks in addition to the development of other producing oil fields.
Iraq seeks U.S. partnerships and output growth
Iraqi Prime Minister Ali al-Zaidi, who took office in May, visited Chevron's Houston headquarters on Thursday as part of a five-day trip to the U.S., which included a meeting with President Donald Trump on Tuesday.
Iraq's government is seeking to secure U.S. partnerships during this week's visit to help boost its oil output. Both the prime minister and oil minister met with Chevron Vice Chairman Mark Nelson on Thursday.
"We appreciate the chance to meet with Iraqi leaders and talk about how our expertise in building large oil and gas projects throughout the world can support Iraq as it further develops its abundant energy resources," Chevron upstream president Clay Neff said in a statement.
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