U.S. energy behemoth,
) and Russian State-owned company OAO Rosneft are in talks to
jointly tap Iraq's widespread West Qurna-1 oilfield.
Russia's top crude oil producer, Rosneft, confirmed that both
parties are only in the early stage of discussion over the Iraqi
venture. As per Russian daily
, Rosneft may acquire a 20% stake in the ExxonMobil-operated
project in southern Iraq within a month.
ExxonMobil seeks to boost its West Qurna-1 oilfield output by
100,000 barrels per day by this year-end from the current daily
406,000 barrels. Located in the south of Iraq near the city of
Basra, the West Qurna oil field has estimated reserves of 8.7
Iraq may witness increased production following a series of
agreements with foreign companies as the country looks to double
output over the next three years. This would give Iraq the much
needed cash for renovation after decades of war, sanctions and
ignorance. Earlier this year, Rosneft secured major deals with
international energy companies such as ExxonMobil, Norwegian
) and Italian operator
). Earlier, Rosneft had modest exposure to the international
In April, ExxonMobil formed a joint venture with Rosneft
allowing the latter to explore North American unconventional
sources as well as gain access to the know-how for developing
unreachable resources. Under the $3.2 billion deal, the groups will
be engaged in the joint exploration in the Arctic offshore region
and the tight oil reserves in Western Siberia.
However, Exxon's participation in West Qurna remains obscure as
the Iraqi authority is concerned over the company's venture to tap
reserves in the country's semi-autonomous Kurdistan region.
ExxonMobil turned out to be the first among the oil giants to gain
entry into Kurdistan, after it signed a deal in mid October 2011 to
explore six areas. But the signing of this contract has angered the
Baghdad government, which considers the pact as illegal.
Iraq's central government continues to assert its authority over
the energy deals inked within its borders in the midst of continued
lack of legislation for the sector. The Iraqi government also
considers all deals signed with the Kurdistan Regional Government
(KRG) as unacceptable. On the other hand, the KRG states that all
deals it has signed conform to the country's new constitution.
Meanwhile, Russia's second-largest oil producer, LUKOIL, also
proposed Rosneft to participate in the Iraq's West Qurna-2
oilfield. The oilfield - with recoverable oil reserves of around 14
billion barrels - is the world's second-largest undeveloped
ExxonMobil holds a Zacks #3 Rank, which is equivalent to a Hold
rating for a period of one to three months. For the long term, we
maintain a Neutral recommendation on the stock.
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