Starring role: Rex Tillerson
ExxonMobil eyes starring role in Iraq
ExxonMobil is in talks with Baghdad to create the investment climate that would allow it to become a significant player in Iraq's energy sector, the US supermajor's chief executive Rex Tillerson said today.
Iraq, which sits on the world's third-largest oil reserves, needs billions of dollars of foreign investment to overhaul its oil sector and boost output after years of sanctions and war.
"I hope Iraq creates the conditions that will allow a company like ExxonMobil to be a participant in a significant way," Tillerson told Reuters in an interview ahead of an energy conference in Qatar.
"That's the dialogue we are having with them to make them understand what conditions will be necessary for us... to take risk with our capital and have the opportunity to be successful over the long term."
Iraq is drawing up the contract terms for a bidding round for six giant fields, which together hold more than a third of its reserves. The country has sweetened the terms for deals on offer but international players remain concerned they will be taking on huge risk for little reward.
Tillerson pointed to Qatar as an investment model that attracts international oil companies. ExxonMobil is the largest foreign investor in the Gulf Arab state and projects due to start there make up the bulk of the company's global production growth in 2009.
ExxonMobil has stakes in projects that are set to double Qatar's production capacity of liquefied natural gas in 2009 to 62 million tonnes.
Despite the huge volume of new production capacity, Qatar as a cheap producer was well placed to adapt to an LNG market suffering as the economic downturn eats into demand, Tillerson said.
"Today the LNG market is relatively balanced, but I think it is going to be soft. It is going to be a bit challenging in the next year or so," he said.
"But Qatar can deliver LNG at a cost of supply below any other LNG source in the world. So their ability to withstand downward pressure on prices is much greater than other sources of LNG."
Low oil and energy prices had not had an impact on ExxonMobil's spending plans as the company takes investment decisions with a long-term perspective rather than based on short-term oil price swings, he said.
"We stay within a range looking at the future and therefore we don't make investments that require a real high price to be successful," Tillerson said.
"We don't invest outside of the range when it is high, and we don't worry about it when it gets too low."
Asked if oil prices were too low for Exxon to continue investment, Tillerson said: "No, I don't think so."
ExxonMobil said last week it would spend about $29 billion in 2009, the upper end of its five-year annual spending target of $25 billion to $30 billion per year.
In Qatar, LNG processing plant Qatargas train four was already liquefying gas and loading of the first cargo was imminent, Tillerson said.
In the UK, the South Hook LNG terminal that Exxon and Qatar Petroleum have built together to receive Qatari gas will start up within a few weeks, he said.
In Italy, another port that will receive Qatari gas should take its first load of LNG before the end of June, Tillerson said. The Adriatic LNG terminal was under testing, he said.
ExxonMobil was also developing two projects to boost Qatar's domestic gas supply and remained in talks to build a petrochemical plant in the country, Tillerson said