One of
China
's
largest oil companies is unable to participate in projects in central and
southern
Iraq
four
years after it acquired a project in northern
Kurdistan
.
State-owned China Petrochemical Corp., or Sinopec Group, has been on a mission
to boost overseas oil production amid growing demand at home, and has said that
it plans to more than double its share of output from overseas projects to more
than 50 million metric tons of oil equivalent a year by 2015--from 22.8 million
tons in 2011.
But it remains stymied in
Iraq
because of its 2009 acquisition of
Switzerland
's
Addax Petroleum Corp., which had an oil contract with the semiautonomous
Kurdistan Regional Government in northern
Iraq
, a
contract that angered the central Iraqi government.
Sinopec held talks with
Russia
's OAO
Lukoil Holdings about jointly developing the West Qurna-2 oil field in southern
Iraq
,
Lukoil's chief executive Vagit Alekperov said Monday. "Unfortunately, the
Iraqi government didn't confirm joint work with Sinopec," he said at a
news conference.
Sinopec would have been unable to work on the project if the two companies had
reached an agreement, a senior Iraqi oil official said Monday. "[Sinopec]
can't whatsoever invest in any oil project in central and southern
Iraq
because of previous violations," the official said.
Sinopec has been unable to secure projects in central and southern
Iraq
since
2009, when it purchased Addax for 8.27 billion Canadian dollars ($8 billion). At
the time, Addax was
China
's
largest-ever overseas acquisition by value. Shortly after Addax was sold, the
Iraqi oil ministry warned Sinopec that it would be barred from taking part in
Iraq
's
second licensing auction to develop its oil fields.
A Sinopec spokesman said Monday that the company remains in contact with the
Iraqi government and that both sides are looking for more opportunities for
cooperation. Although Sinopec is developing a number of overseas projects with
foreign companies, cooperation mainly depends on how satisfied the company is
with the project's development strategy and economics and the investment
environment of a foreign country, the spokesman said.
Lukoil is the sole operator of West Qurna-2, which holds an estimated 13
billion barrels of recoverable reserves. The Russian company originally signed
a contract in 1997 to develop the field but was expelled from the country in
2002. In 2009, Lukoil regained the rights to develop the field, which is
expected to begin producing 150,000 barrels a day by the end of the year.
Sinopec said Addax produced to 8.5 million tons, or about 170,000 barrels a
day, of crude oil last year. That equates to almost 30% of Sinopec's overseas output in 2012.