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ExxonMobil signals return to Iraq with Majnoon pact

  • : Crude oil
  • 25/10/08

ExxonMobil has signed a preliminary agreement with Iraq's oil ministry to help develop upstream assets, including the 240,000 b/d Majnoon field in the south. The deal aligns with Iraq's goal of raising its crude production capacity to 6mn b/d by 2029, up from around 5mn b/d today.

The Heads of Agreement was signed in Baghdad following a meeting between Iraq's prime minister Mohammed Shia al-Sudani and ExxonMobil senior vice-president Peter Larden.

"During the meeting… the prime minister said the agreement represents an important step for the future of Iraq's oil sector, and for the strengthening of economic relations with the US," al-Sudani's office said in a statement on social media platform X.

The agreement covers not only Majnoon's development, but also efforts to boost recovery rates at Iraqi fields and plans to modernise oil export infrastructure.

It paves the way for ExxonMobil's return to Iraq's upstream sector, after its exit in late 2023 following a protracted process to sell its stake in the 470,000 b/d West Qurna-1 project.

ExxonMobil entered into an agreement with third parties to sell its 32.7pc stake in the project back in January 2021. But Iraq blocked the sale, prompting the company to file an arbitration case with the International Chamber of Commerce (ICC).

The firm eventually managed to sell 10pc to Indonesia's Pertamina in February 2023 and the remaining 22.7pc to Iraq's state-owned Basrah Oil in November of that year.

Baghdad seeks upstream revival

Today's agreement reflects Baghdad's renewed efforts to draw international oil firms back to its upstream sector, following the departure of several big players in the 2010s, including US independent Occidental and Shell.

BP also considered exiting the 1.5mn b/d Rumaila project, Iraq's largest producing oil field, but stayed after Baghdad approved a 2021 plan to spin off its Rumaila business into a separate entity.

Al-Sudani reiterated Baghdad's "keen interest in co-operating with major companies, particularly American ones, to operate and develop key fields, like Majnoon," his office said today.

TotalEnergies was the first mover of the new era, signing a long-delayed $27bn deal with Iraq in July 2023 to develop a multi-energy project that includes oil redevelopment, gas capture to reduce flaring, a seawater treatment facility, and a solar power plant to support Iraq's energy transition.

In February this year, BP agreed a deal with Iraq to redevelop several fields in the country's Kirkuk region in the north. And in August, Chevron signed a preliminary agreement to develop four oil and gas exploration blocks in Nasiriya in the south, and the Balad oil field, among others.


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