Sheila McNulty Chevron may have last laugh in Iraq

A BP-led consortium may have won a deal to develop Iraq’s largest oilfield, but Chevron could have the last laugh.

The US oil company did not even bid for one of the highly touted contracts. While Chevron is not saying anything about what kept it out of the race, an industry source says the world’s third biggest oil company decided the terms being offered were too unfavorable for the company to make money.

There is no doubt BP is a risk taker. TNK-BP, the Russian joint venture and one of its biggest risks, has mired BP is a political tug of war with some of the country’s most powerful oligarchs. Whether that risk will pay off is still unclear to some.

Chevron, too, takes risks, it stayed in Venezuela when others, such as ExxonMobil and ConocoPhillips, pulled out amid the nationalization of energy assets. Yet that risk has proven more valuable than the withdrawals of Exxon and Conoco, which have yet to recover their lost investments.

If Chevron decided Iraq was not worth the investment, maybe it wasn’t. One striking thing though is that Chevron, unlike many other international oil companies, did not bid at all. Even those that did not want to win – and were certainly not going to accept Iraq’s demands – put in bids, albeit such unattractive ones that they were unlikely to win any contract. Chevron was almost alone in showing up for the show in person (an executive was in the bidding room in Baghdad) but not ever putting up its hand, even tentatively to show it was in class in the hopes of winning a few brownie points, rather than scoring itself a contract to repair an Iraqi oil field.