Exxon Mobil Corp. is preparing to sell a 25% stake in an Iraqi oilfield to PetroChina as China eyes Iraq as one of its key suppliers.
PetroChina will acquire 25% of Exxon Mobil’ 60% stake in the West Qurna-1 oil field, while Exxon will retain a 35% interest and continue to be the field’s operator.
West Qurna-1 is located in southern Iraq, near Basra. Royal Dutch Shell and Iraq’s state-owned South Oil Co. also own stakes in the field.
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The field has a production potential of some 3 million barrels of crude oil per day and currently produces around 500,000 bpd.
Exxon’s decision to divest in southern Iraq was partly in response to an ongoing conflict between the Iraqi central authorities in Baghdad and the authorities of the Kurdistan Regional Government (KRG) in Erbil over control of oil and gas resources.
In 2011, Exxon took a major step against Baghdad’s authority by closing a unilateral deal for the development of oil with the KRG, prompting threats from Baghdad to Exxon and other companies who have sought out better deals from Erbil.
PetroChina's deal with Exxon is a further indication of China's appetite for Iraqi crude. China has quickly emerged as a key buyer of Iraqi crude, having more than doubled its imports from Iraq since 2009, according to Chinese customs data.
In the meantime, China has been gobbling up Iraqi supplies, doubling crude imports from Iraq since 2009.
By. Joao Peixe of Oilprice.com