Oil companies have proposed millions of dollars of cuts in development spending in Iraq, a senior oil ministry official said, after Baghdad told them low oil prices and its fight against Islamic State had made payments difficult.
In a series of letters sent to companies such as Royal Dutch Shell, BP and Exxon Mobil since January, the oil ministry set out the need for change in response to "the rapid drastic decrease in crude oil prices".
The slump in crude prices to below US$60 a barrel from US$115 in June has slashed government revenues in Iraq, OPEC's second biggest exporter, just as it faces economic crisis triggered by Islamic State's seizure of north and western provinces and surging expenditure to fund a military counter-offensive.
In view of the fact that a significant proportion of development costs are passed on to Iraq, the oil ministry called on firms to revise their oilfield development plans by considering postponing new projects and delaying already committed projects as long as no additional costs were incurred.
Edited from source by Joseph Green
Source: Thomson Reuters