PetroChina has replaced Exxon as the operator of the West Qurna 1 field in southern Iraq, holding the largest stake in the field.
“We studied the settlement agreement and the oil ministry with the Basra Oil Company believe that the best option is for PetroChina to become the lead contractor of West Qurna 1,” a deputy manager at Iraq’s Basra Oil Co. said, as quoted by Reuters.
Exxon made public its plans to exit Iraq’s oil industry in 2020, with reports emerging last year saying it was in talks with two Chinese companies to sell the West Qurna 1 stake to.
Some reports suggested that Exxon’s decision might have something to do with worsened relations between the supermajor and the Iraqi government after Exxon got involved in oil production in the Kurdistan autonomous region, whose leadership is at odds with Baghdad.
Now, Exxon’s stake in West Qurna 1 will be transferred to state-owned Basra Oil Company, with PetroChina as the lead contractor operating the field.
Besides PetroChina, shareholders in West Qurna 1 include Indonesia’s Pertamina, which last year bought a 10% stake in the field, and Japan’s Itochu. Basra Oil Company will become the majority shareholder after the completion of the Exxon deal, with over 50% in the field.
West Qurna 1 is one of the largest oil fields in the world, with reserves estimated at more than 20 billion barrels of recoverable hydrocarbons. Production averages 500,000 barrels daily and makes the field a cornerstone in Iraq’s plans to boost its national total considerably.
There are ambitions to raise production capacity to between 7 and 8 million barrels daily, from a current capacity of 5 million bpd, with actual production rates at some 4.5 million barrels daily. However, analysts have noted it would be a tough thing to do, and production capacity would probably peak below this level, at some 6.3 million barrels daily.
The most commonly cited reason for this is the politically unstable situation in the Middle Eastern country, which has prevented it from creating an investment-friendly climate for oil companies that are increasingly being squeezed by transition-focused shareholders and other decision influencers, and have become a lot pickier about their investment decisions.
By Charles Kennedy for Oilprice.com
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