Creating new perspectives since 2009

Iraq: PetroChina to replace Exxon as lead contractor for West Qurna 1 oilfield

November 12, 2023 at 2:18 pm

Huang Yongzhang, president of PetroChina Co., during a news conference in Hong Kong, China, on Thursday, Aug. 31, 2023 [Lam Yik/Bloomberg via Getty Images]

China’s state-owned oil and gas company, PetroChina is to replace US energy giant Exxon Mobil Corp as the lead contractor for Iraq’s West Qurna 1 oilfield, following a settlement agreement, whereby the latter will finalise its exit from the oilfield, according to a senior Iraqi oil executive.

Yesterday Reuters quoted the deputy manager of Basra Oil Co., Hassan Mohammed as saying: “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.”

The Iraqi government has also signed a “sale agreement” arranging the financial issues to finalise the process of acquiring Exxon Mobil Corp’s stake in West Qurna 1 oilfield by state-run Basra Oil Co., said Mohammed. The sale agreement includes a commitment to resolve the tax value that Exxon must pay for selling its stake in the field, he added.

“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,” the executive said.

OPINION: China is engaging with local actors to secure its trade and investments in the Middle East

The news agency reported that two oil managers at the West Qurna 1 field confirmed the details of the settlement and sale agreement signed with Exxon.

Following Exxon’s exit from the oilfield – which is one of the world’s largest, the company will no longer have a presence in Iraq’s energy sector.

Earlier this year, Oil Price reported that although PetroChina bought a 32.7 per cent stake in the field at around the same time as Exxon took its identically-sized stake in the field, “China has long been the dominant partner in West Qurna 1.”

“This was achieved by dint of several under-the-radar deals that on paper were for ‘contract-only’ work related to various anodyne-sounding projects but together established total control for China over the field, at ExxonMobil’s expense.”

READ: Cooperation between rival transport corridors could change global economies