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China's oil operations in Iraq unaffected, cuts some staff

Source: Reuters - Wed, 18 Jun 2014 10:18 GMT
Author: Reuters
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By Chen Aizhu and Ben Blanchard

BEIJING, June 18 (Reuters) - PetroChina, the single biggest investor in Iraq's oil sector, is pulling some of its staff out of the Middle East nation, but production remains unaffected as militant Islamists threaten the unity of OPEC's second-largest producer.

China is Iraq's largest oil client, and its state energy firms, which also include Sinopec Group and CNOOC Ltd, together hold more than a fifth of the country's oil projects after securing some of its fields through auctions held in 2009.

Some non-essential staff have been evacuated, said Mao Zefeng, joint company secretary of PetroChina, China's largest energy firm, without saying how many or if they had been moved out of Iraq entirely or to safer zones in the country.

A few oilfield service staff have been evacuated, a second company official said.

"We've got our contingency plan," said Mao. "But as our fields are all in the south, they are not affected yet."

Iraqi officials say the southern regions that produce some 90 percent of the country's oil are completely safe from the Islamic State of Iraq and the Levant (ISIL), which has seized much of the north in a week as Baghdad's forces there collapsed.

Some oil firms, such as BP and Exxon, were pulling foreign staff from Iraq, fearing the militant insurgents could strike major oilfields in the Shi'ite south.

Japan's Japex has removed staff from southern Iraq as a precaution, but production is normal.

Malaysia's Petronas, which has interests in four oil fields in Iraq - the Garraf, Majnoon, Badra and Halfaya - all in the south and east, said in a statement it had evacuated 28 of its 166 Iraq employees to Dubai.

Ninety-five employees essential to its operations in Iraq would stay on, while the rest would be evacuated, the state-run company added.

PetroChina partners with BP at Rumaila, Iraq's largest producer, and operates the Halfaya and al-Ahdab fields. It was the first foreign firm to sign an oil service deal in Iraq after U.S.-led forces toppled Saddam Hussein.

Last August, the Chinese firm also agreed to acquire from Exxon Mobil a stake in the giant West Qurna-1 field, also in the south near the oil hub Basra.

PetroChina and its parent China National Petroleum Company (CNPC) both have engineers and workers in Iraq, with CNPC's staff providing drilling and oilfield services. They outnumber the mostly administrative staff of PetroChina.

A Chinese citizen working for an unnamed Chinese company was kidnapped on June 12 but later released, Foreign Ministry spokeswoman Hua Chunying said on Wednesday, but gave no details.

Hua said there were more than 10,000 people now working for Chinese companies in Iraq, based in areas outside the conflict zone that were "basically stable".

"We will take necessary steps, depending on how the situation develops, to ensure the safety and legal rights of Chinese companies, organisations and workers in Iraq," she said, when asked whether there would have to be an evacuation.

"We hope the situation does not develop so that China has to have a large-scale evacuation like Libya," she added, referring to the mass evacuation of Chinese and other foreigners during Libya's civil war.

Sinopec, China's second-largest oil major, which has operations in the Taq Taq field in the autonomous Kurdish region in the north, does not have any Chinese staff working there, a company press officer said.

CNOOC Ltd, which operates the Maysan oilfield in the south, has also triggered a contingency plan, while field production is normal, a company official said. (Additional reporting by Judy Hua and Osamu Tsukimori in TOKYO; Editing by Clarence Fernandez)

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