BASRA: Iraq has signed a settlement agreement with US energy giant Exxon Mobil Corp to finalise its exit from the West Qurna 1 oilfield and allow PetroChina to become the field’s lead contractor, a senior Iraqi oil executive said on Saturday.

“We studied the settlement agreement and the oil ministry with the Basra Oil Company believe that the best option is for PetroChina to become the lead contractor of West Qurna 1,” Hassan Mohammed, deputy Basra Oil Co manager in charge of oilfields and licensing rounds affairs, told Reuters.

PetroChina will hold the largest stake in the field after the departure of Exxon.

Iraq has also signed a “sale agreement” arranging the financial issues to finalise the process of acquiring Exxon Mobil Corp’s (XOM.N) stake in West Qurna 1 oilfield by Iraq’s state-run Basra Oil Co (BOC), said Mohammed.

The sale agreement includes a commitment to resolve in further talks the tax value that Exxon must pay for selling its stake in the field, he said.

“Tax issue is not resolved yet and according to the sale agreement we have two options, either to reach a tax settlement or we resort to arbitration,” said the BOC executive.

Exxon and PetroChina were not immediately available for comment, but two oil managers at the West Qurna 1 field confirmed the details of the settlement and sale agreement signed with Exxon.

Last year, Indonesias state-owned oil and gas firm Pertamina bought 10% of Exxon Mobils stake in Iraqs West Qurna 1 oilfield, increasing its share to 20%, while BOC bought 22.7% of the field.

West Qurna 1, in southern Iraq, is one of the worlds largest oilfields with recoverable reserves estimated at more than 20 billion barrels.

Published in Dawn, November 12th, 2023