Exxon Talking to Buyers for Iraqi Oil Field Stake (XOM, RDS-A, BP, E)

Before you go, we thought you'd like these...
Before you go close icon

On Wednesday, the Iraqi government said that Exxon Mobil Corp. (NYSE: XOM) had notified it that the company planned to sell its stake in the West Qurna-1 oil field project. Exxon owns 60% of the field and is its operator. Royal Dutch Shell PLC (NYSE: RDS-A) holds a 15% stake in the field and the Iraqi government holds the rest.

Russia's Lukoil confirmed this morning that it has received an offer from Exxon, and that the Russian company will consider the stake. Exxon also has reportedly talked with BP PLC (NYSE: BP), Eni SpA (NYSE: E) and China's CNPC about buying the stake.

Exxon has signed contracts with the Kurdistan Regional Government to develop six projects in Kurdistan, and that has led to friction between the U.S. supermajor and the Iraqi government, which claims it is the sole controller of oil rights in the country. Iraq barred Exxon from bidding on new fields in an April auction as punishment for the company's agreement with the Kurds.

Under its contract for West Qurna-1, Exxon receives $1.90 per barrel for each barrel it produces above 244,000 barrels a day, the field's production level when the contract was signed in 2010. The field currently produces about 400,000 barrels a day, and the Iraqis' ultimate goal calls for 2.85 million barrels a day. No price for Exxon's stake has been revealed.

It is early days yet in any discussion of a sale, but Exxon apparently has cast its lot with the Kurds, who have offered a production-sharing deal that could be much more lucrative for the company than the per-barrel deal it has with the Iraqi government. Exxon also is betting that the central government will not use force to bring the Kurds to heel. That does not appear to be likely anytime soon, but it may be prudent never to say never when it comes to any issue related to oil.

Paul Ausick


Filed under: 24/7 Wall St. Wire, Commodities, International Markets, Oil & Gas Tagged: BP, E, RDS-A, XOM
Read Full Story

Markets

S&P 500 2,387.45 -1.16 -0.05%
DJIA 20,975.09 -21.03 -0.10%
NASDAQ 6,025.23 -0.27 0.00%
DAX 12,472.80 5.76 0.05%
NIKKEI 225 19,263.01 -26.42 -0.14%
HANG SENG 24,575.01 -3.42 -0.01%
USD (per EUR) 1.09 0.00 -0.04%
USD (per CHF) 0.99 0.00 0.03%
JPY (per USD) 111.23 0.04 0.04%
GBP (per USD) 1.29 0.00 0.15%

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

12 Facts That Will Make You Smarter Than Your Friends 12 Facts That Will Make You Smarter Than Your Friends
Nature Gets Revenge On Safari Hunter Who Killed Elephants And Lions For Sport Nature Gets Revenge On Safari Hunter Who Killed Elephants And Lions For Sport
Man Is Horrified To Learn His Biological Father's Identity - But A Look In The Mirror Man Is Horrified To Learn His Biological Father's Identity - But A Look In The Mirror