Rebalancing IOCs Positioning in Iraq's Upstream Petroleum Sector, 2 APRIL

 Rebalancing IOCs Positioning in Iraq's Upstream Petroleum Secto

Rebalancing IOCs Positioning in the Upstream Petroleum Sector in Iraq

The Ministry of Oil (MoO) recently concluded an agreement with BP covering four main oilfields in Kirkuk, following an earlier contract with an unidentified Ukrainian company to resume development of the Akkas gas field.

Approximately a year prior, MoO finalised and executed an agreement with TotalEnergies and QatarEnergy encompassing four different projects. These three agreements could, if implemented, reverse the exodus of International Oil Companies (IOCs) and rebalance their positioning in Iraq's upstream petroleum sector. The lack of transparency surrounding these deals makes it difficult to assess how well they serve Iraq's interests. However, available information suggests the agreements, particularly with BP and TotalEnergies, strongly favor these IOCs from a comparative perspective.

IOCs include well-known majors, medium-sized enterprises, and smaller companies, broadly categorised as Western IOCs (WIOCs) and non-Western IOCs (NWIOCs). Their positioning in Iraq's upstream petroleum sector over the past twenty years has evolved through three distinct yet overlapping phases.

1. The initial phase, coinciding with the aftermath of the 2003 Anglo-American invasion and occupation, was characterised by clear WIOC dominance.
2. This dominance gradually and dramatically weakened during the second phase, culminating in an exodus of several major WIOCs, which created opportunities for NWIOCs to enter the market and, for larger companies among them, to consolidate their strategic positions.
3. The third phase has witnessed new agreements with select WIOCs, two of which could significantly rebalance their own positions and, consequently, overall WIOC positioning in Iraq's upstream petroleum sector.

While IOC positioning carries geopolitical and strategic implications from both corporate and national perspectives, this article focuses primarily on the corporate viewpoint. The contractual frameworks, governance modalities, processes, and stakeholder relationships differ across these three phases.

After reviewing and analysing these phases, this article provides a comparative assessment of the latest two agreements-the TotalEnergies and BP-Kirkuk deals.

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