ExxonMobil asks for arbitration over delayed Iraq sale

ExxonMobil is seeking arbitration against Iraq's state-owned Basrah Oil over its efforts to sell a stake in one of the nation's biggest oil fields.

The case was filed with the International Chamber of Commerce and concerns the US oil major's "marketing efforts of our working interest in the West Qurna I field," ExxonMobil said in a statement today.

ExxonMobil said it worked in good faith and in line with its technical service contract with Basrah Oil and the Iraqi government to win their support for the sale of a 32.7pc interest in the 500,000 b/d field.

"We are proud of our history in Iraq and our longstanding positive relationships with the Basra Oil Company and the government of Iraq, and will continue to work closely and constructively to reach an equitable resolution," the company said.

The sale of its West Qurna 1 stake would come as a blow to Iraq's oil sector, which has struggled to attract and retain large international oil firms in recent years as a result of commercially unattractive contractual terms and payment difficulties. Iraq may face further struggles as investors focused on environmental, social and governance (ESG) metrics force firms to assess the climate impact of their assets.

Basrah Oil previously rejected a planned sale to two Chinese firms, according to sources, but it publicly stated it had no objection to a Chinese buyer, after Chevron rejected an approach by Baghdad.

Iraq had sought a US firm to try to diversify an upstream investor portfolio in which Chinese firms have recently expanded their already extensive presence.

Price appeared to be another issue. Iraq's long-term technical service contracts state that any firm wishing to sell its interest requires approval from Basrah Oil, which has rights to buy on the same terms and conditions.

Baghdad said it was open to Basrah Oil or another state-run firm acquiring ExxonMobil's share, but it declined to buy at the agreed sale price. Iraq previously aimed to sell the stake by the end of June.

ExxonMobil said it had entered into an agreement with third parties to sell its working interest in January.

By Stephen Cunningham and Rowena Edwards