The Iraqi government has agreed to buy out ExxonMobil’s 32.7% stake in the southern West Qurna 1 oil field, with state-owned Basra Oil Company acquiring the largest share in what is touted as one of the world’s largest oil fields with recoverable reserves estimated to exceed 20 billion bbl.
Iraq’s Oil Minister and head of Iraq’s OPEC delegation, Ihsan Abdul Jabbar announced the government’s final investment decision to buy out Exxon during an event on 19 June in Baghdad marking the 60th anniversary of OPEC’s founding.
Iraq's oil ministry had asked formally to buy ExxonMobil's West Qurna 1 shares in May 2021 after the supermajor failed to win the government’s approval of an agreement it made the previous January to sell its 32.7% to third parties. Among the parties was PetroChina which already held a 32.7% share.
ExxonMobil was reportedly asking $350 million for the stake, according to the UK-based Arabic news service Shafaq. Abdul Jabbar said, “Iraq will buy the largest share” of Exxon’s stake while “a company operating in the oil field will buy the rest," Shafaq reported.
The field had a production capacity close to 500,000 B/D in 2021, according to Iraqi officials.
ExxonMobil won the contract to join the development of West Qurna 1 in 2010 and in 2013 it sold stakes to Indonesia’s Pertamina and to PetroChina. Other partners in the project include Japan's Itochu (19.6%), Indonesia's Pertamina (10%), and Iraq's Oil Exploration Co. (5%).
As ExxonMobil began negotiating in early 2021 to wind down its position in West Qurna 1, the company simultaneously sought to sell its 32% interest in the Baeshiqa license in Iraq's semiautonomous Kurdistan region.
Exxon sold the interest to Norwegian independent oil and gas operator DNO ASA, enabling DNO to double its operating stake in the Baeshiqa production-sharing contract to 64%. DNO also holds 75% in Kurdistan’s Tawke production-sharing agreement, according to DNO’s website.
Iraq’s current oil exports total 3.8 million B/D from all producing regions including Kurdistan. In July, Iraq expects to ship 3.85 million B/D, which is within its allotted OPEC output share, Abdul Jabbar told reporters during the 19 June event.
Iraq is OPEC’s second-largest producing member and is allowed to produce up to 4.51 million B/D this month and 4.58 million B/D in July under its quota.
Baghdad aims to reach a peak production of 8 million B/D by the end of 2027 by “executing projects in almost all oil fields, especially the ones in Basrah," the Shafaq news service quoted the Iraqi oil minister as saying. He added that Iraq is also involved in infrastructure projects aimed at achieving that goal.
Besides the West Qurna 1 news, Jabbar also announced that TotalEnergies will start work in late July on the $27-billion oil and solar power project in the Basra region that had been scheduled to start last year but was delayed because of financial issues.
TotalEnergies plans to invest in the Ratawi heavy-oil field near Basra where it will use a seawater- injection technology to maintain production. The French major also aims to capture associated gas to reduce flaring and build a 1-GW solar plant as part of the largest foreign investment to date in Iraq.
Iraq’s Deputy Prime Minister and Finance Minister Ali Allawi contradicted the oil minister while speaking over the weekend at the Iraq Energy Forum, which was also held in Baghdad. Allawi said bottlenecks in the aging export system around Basrah (from where 85% of Iraq’s crude exports are shipped) will constrain exports to no more than 6 million B/D over the next 5 years.
With ExxonMobil’s departure from Iraq, Shell and BP are the only international majors (IOCs) still in the market.
Shell holds a 44% stake in the Basrah Gas Company (BGC) joint venture with Iraq’s South Gas Company (51%) and Japan’s Mitsubishi Corporation 5% as partners. BGC is one of the largest flare-reduction projects in the world and is Iraq’s main gas processing hub for flare gas captured from three fields: Rumaila, West Qurna 1, and Zubair.
BP is a part of Basra Energy Company Ltd. (BECL) a joint venture it created together with China National Petroleum Corp. BECL owns and manages the two partners’ interests in Iraq's supergiant Rumaila oil field which they are developing under a technical service contract through the end of 2034.
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