US firm sees Iraq oil sector growth in phases
San Francisco, April 24, 2010
Schlumberger, the world’s largest oilfield services company, expects that in order to avoid extra costs, the companies now setting up shop in Iraq to extract oil will only expand as they win new work.
Schlumberger chief executive Andrew Gould also said the companies would be unlikely to earn much money from early work in the country, which mainly involves rehabilitation of existing fields and drilling wells in known locations.
He noted that every piece of infrastructure built there added to a company's security risk and security costs.
'Every time you have a new base, you have to have more security and it costs you more,' he said on a call to discuss first-quarter results.
'So I think people will build out, or certainly we will build out, project by project.'
But Gould, whose views of the oil business are watched closely, said the future of Iraq's industry would likely belong to its national oil companies, with privately owned companies less likely to commit more money than they already have.
'I don't think that the oil companies will hesitate to spend on the first phase of the activity in Iraq, just because at this point in time there is no stable government,' he said.
'Two or three years down the road, if they don't have a satisfactory judicial, fiscal and political atmosphere, they will hesitate before they go into the very large spending that will be required for the new development,' he added.
Schlumberger is part of a joint venture that has been awarded work on the Rumaila oilfield, along with smaller rival Weatherford International Ltd.
Weatherford said this week it had 1,000 people working in Iraq as it tries to get nine separate drilling operations up and running this quarter. The Wall Street Journal reported last week that Schlumberger was completing a 40-acre compound near Basra, and expected to have 300 employees there by July.
Halliburton, Schlumberger's nearest competitor, is also building its presence in the country. – Reuters