Source: Daily Star

BAGHDAD: An ExxonMobil-led consortium has beaten rival Russian, French and Chinese groups to bag initial rights to develop Iraq’s West Qurna field, the Oil Ministry said, adding momentum to Iraq’s bid to unlock its oil riches. With reserves of 8.7 billion barrels, West Qurna is among the prized Iraqi fields eyed by Western oil majors as they face flat or lower output at home and stiff competition from Chinese and Indian oil companies in bidding for oilfields elsewhere.

“The consortium led by ExxonMobil, which includes Shell, won the contract to develop West Qurna Phase One oilfield,” Oil Ministry spokesman Asim Jihad said.

The initial deal was signed in Baghdad on Thursday but needs Cabinet approval before it can be finalized.

The 20-year contract is part of a raft of deals Iraq is close to formalizing in a bid to catapult itself to the world’s third largest oil producer after decades of war and economic decline.

There is no guarantee that Iraq’s next government – to be elected in January ­– will honor the deals, but it injects optimism into prospects for Iraq’s battered oil sector and a second oil bid-round in December, after a lacklustre June auction.

ExxonMobil, partnering Royal Dutch Shell, beat Russia’s LUKOIL – which had teamed up with US oil-major ConocoPhillips – and two other groups led by France’s Total and China’s CNPC.

ExxonMobil’s output target for West Qurna Phase One beat those of its rivals and allowed it to clinch the contract, said an Iraqi oil official, who was part of the negotiating team.

“This is better for us,” the Iraqi oil official said. “We need higher production. This is a supergiant field and it has the capacity to produce even more than the target set by Exxon.”

The group plans to raise the field’s output nearly five-fold to 2.325 million barrels per day (bpd) from less than 500,000 bpd at present, Iraqi Oil Minister Hussain al-Shahristani said.

He also said the consortium planed to spend as much as $50 billion in investment and operating costs for the project over six years, but there was no immediate confirmation of the figure from the companies.

The consortium would get a remuneration fee of $1.9 per barrel, the minister said.

The pact on West Qurna comes after British oil major BP Plc. and China’s CNPC on Tuesday signed an agreement for the Rumaila oil field: Iraq’s first major new oil deal since the 2003 US-led invasion.

A group led by Italian oil major Eni also signed an initial agreement on Monday to develop the Zubair oilfield, and Iraq said it also expected to ink an agreement with Nippon Oil Corp on Nassiriya in the coming days.

Analysts said the timing of the deals ahead of the January 16 poll in Iraq was convenient for both the Iraqi government and oil companies.