Iraqi Cabinet OKs Exxon-Shell deal
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Qassim Abdul-Zahra Associated Press Writer
Iraq’s government approved a major oil deal with a consortium grouping U.S. and European oil giants Exxon Mobil Corp. and Royal Dutch Shell PLC to develop a prized oil field in the country’s south, the prime minister said Nov. 10.
The two companies will develop the 8.6 billion barrel West Qurna 1 field, where they plan to boost production nearly 10 fold from the current 280,000 barrels per day to 2.325 million barrels within seven years. They will receive $1.90 per barrel produced.
The agreement marks the return of ExxonMobil and Shell to oil-rich Iraq, which expelled the international majors after it nationalized the sector in the 1970s.
The Oil Ministry is expected to finalize the 20-year service contract soon.
Second deal in discussion Prime Minister Nouri al-Maliki also said that his government is still discussing a second deal with a consortium led by Italy’s Eni SpA to develop the 4.1 billion barrel Zubair field. A decision on that deal is expected in the coming weeks.
The Cabinet’s approval of the Exxon-Shell deal comes a week after Baghdad finalized a contract with British oil giant BP PLC and China’s CNPC to develop the country’s biggest oil field — the 17.8-billion-barrel giant at Rumaila in the south.
BP and CNPC — who were the only winners in a much-touted, but ultimately disappointing oil licensing auction in June — will be paid $2 per barrel produced to raise production from the current 1 million barrels a day to 2.85 million.
Iraq has the world’s third-largest known oil reserves, and crude exports are the country’s most important source of revenue. But Iraq’s current daily output of 2.4 million barrels is far below its potential.
The country’s oil industry has been hampered by years of devastating wars, crippling sanctions and sabotage attacks by insurgents after the 2003 U.S.-led invasion. In addition, Iraq’s oil law, which governs natural resources and regulates foreign investment, has been stalled in parliament since 2007, prompting international companies to stay away.
The West Qurna 1 field was among five oil and two gas fields left over from the June bidding round, Iraq’s first such oil auction in more than 30 years.
Baghdad is planning a second bidding round starting Dec. 11 in which 45 international oil companies will compete for the development rights to 10 projects.
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