ExxonMobil is negotiating with Baghdad to inherit Lukoil’s stake.
ExxonMobil has approached Iraq’s oil ministry to express its interest in buying the majority stake held by Russia’s Lukoil in the giant West Qurna-2 oil field, according to five sources familiar with the matter who spoke to Reuters.
According to a Reuters report, Lukoil is trying to sell its international assets after the United States imposed sanctions on the company, adding that ExxonMobil’s move would be a major expansion of the leading American company’s return to Iraq, at a time when Moscow is trying to liquidate key energy assets.
He noted that Exxon declined to comment, while Lukoil did not respond to questions, explaining that the US Treasury Department has authorized potential buyers to speak to Lukoil until December 13, but that these buyers will need to obtain approval for specific deals.
The report stated that banking sources estimate the market value of the West Qurna-2 field at approximately $1.6 billion, based on its production and reserves exceeding 8 billion barrels.
The report noted that Lukoil’s largest overseas asset is its 75% operating stake in the West Qurna-2 oil field, one of the world’s largest oil fields, which produces about 470,000 barrels per day, representing about 0.5% of global oil supplies and 9% of total production in Iraq, the second largest producer in OPEC after Saudi Arabia.
He noted that Exxon had long operated the adjacent West Qurna-1 project before withdrawing last year, explaining that the American company signed a non-binding agreement with Iraq last October to help it develop the giant Majnoon oil field and expand oil exports.
The report quoted a senior Iraqi oil official as saying that “Exxon is our preferred choice to take over instead of Lukoil,” adding that the company “has the capability and experience to manage a large and complex field like West Qurna-2.”
On Monday, the Iraqi Oil Ministry invited several American oil companies to enter into negotiations regarding control of the West Qurna-2 oil field, and to seek to transfer the operation of the field to one of the companies through competitive bids.
It is worth noting that the Russian company Lukoil declared force majeure at the West Qurna-2 field on November 19th, after its operations were disrupted due to Western sanctions imposed on it, as it sent an official letter to the Iraqi Ministry of Oil stating that there were force majeure circumstances preventing it from continuing operations.
The West Qurna 2 field is one of the huge oil fields in southern Iraq. It was discovered in 1973, and its operating agreement includes the Russian company Lukoil with a 75% stake and the Iraqi South Oil Company. The field forms a key pillar of the Iraqi economy through its contribution to increasing oil production.
Shafaq.com