Five informed official Iraqi sources told Reuters that ExxonMobil contacted the Iraqi Ministry of Oil to express its interest in purchasing the majority stake of the Russian company Lukoil in the giant West Qurna 2 oil field.
Lukoil. Exxon is trying to sell its international assets in the wake of US sanctions on the company, and Exxon’s move would represent a major expansion of the US giant’s return to Iraq, as Moscow tries to offload important energy assets.
Exxon declined to comment, while Lukoil did not respond to Reuters’ request for comment.
The US Treasury has allowed potential buyers to negotiate with Lukoil until December 13, but they will need approval for specific deals. Reuters reported last month that Exxon had joined Chevron in studying options to acquire parts of Lukoil’s portfolio.
The oil field produces 9% of Iraq’s total production
Lukoil’s largest foreign asset is a 75% operating stake in the West Qurna 2 oil field in Iraq, one of the largest in the world with production of about 470,000 barrels per day. The field represents about 0.5% of global oil supplies and 9% of the total production of Iraq, the second largest producer in OPEC after Saudi Arabia.
Lukoil declared a state of force majeure in the field after Iraq stopped payments of cash and crude oil to the company.
Exxon was the operator of the adjacent West Qurna 1 project for many years before withdrawing last year when that part of the field was producing about 550,000 barrels per day. In the period leading up to Exxon’s exit, the then head of the state-owned Basra Oil Company stated that Exxon valued its 32.7% stake in West Qurna 1 at $350 million. The two parts of the West Qurna camp are located in southern Iraq, near the city of Basra.
In October, Exxon signed a non-binding agreement with Iraq to help the country develop the giant Majnoon oil field and expand oil exports, marking the return of the American oil giant to the country.
Exxon’s decision to return to Iraq follows a series of agreements with other oil companies, including Chevron, BP and Total Energy, as Iraq seeks to accelerate oil and gas production by offering more favorable terms.
Iraq prefers Exxon to acquire it
Exxon is our preferred choice to replace Lukoil. A senior official in the Iraqi oil sector who supervises the operations of foreign companies in the south of the country said: “The company has the ability and experience necessary to manage a large and complex field such as West Qurna 2.”
A high-ranking official at the Ministry of Petroleum confirmed this statement.
The Iraqi Oil Ministry said on Monday that it had invited several American oil companies to begin negotiations on the potential acquisition of the West Qurna 2 field.
The ministry stated that it intends to transfer operation of the field to a company through a competitive tender process.