Iraq signs deal with Exxon to help develop large oilfield

BAGHDAD (Reuters) -Exxon Mobil signed an agreement with Iraq on Wednesday to help it develop its giant Majnoon oilfield and expand oil exports, government officials and sources said, marking the U.S. major's return to the country two years after leaving. The non-binding agreement with Exxon follows a string of deals with other oil companies, including Chevron, BP and TotalEnergies, as Iraq seeks to accelerate oil and gas production by offering more generous terms. Iraq holds some of the world's largest oil and gas reserves and once aspired to rival Saudi Arabia with output of up to 12 million barrels per day. It currently produces around 4 million bpd and aims to exceed 6 million bpd by 2029, although progress has been hampered by red tape, corruption, infrastructure bottlenecks, years of conflict and sectarian tensions. Majnoon, located 60 km (37 miles) from Basra in southern Iraq, is one of the biggest oilfields in the world with an estimated 38 billion barrels in place. Iraqi Prime Minister Mohammed Shia al-Sudani announced the deal with Exxon on Wednesday but did not provide details. EXXON SECURES PROFIT-SHARING AND EXPORT RIGHTS The agreement will involve a profit-sharing agreement covering crude oil and refined products and plans to upgrade Iraqi oil export infrastructure in the south, according to four sources with knowledge of the matter. Iraq's state oil company SOMO will also sign an agreement with Exxon to secure storage capacity in the Asian market, the sources said. SOMO and Exxon did not immediately respond to Reuters requests for comment. SOMO could use Exxon's storage in Singapore, Iraqi state news agency INA reported in September. Exxon was one of the first Western oil firms to enter Iraq to develop oil fields after the U.S. invasion in 2003. But it left the West Qurna project due to what sources described as poor returns. It also tried to develop fields in Iraq's semi-autonomous region of Kurdistan despite Baghdad's ire but also left those projects due to what sources said were poor exploration results. After exiting Iraq's giant West Qurna 1 oilfield, Exxon transferred its remaining stake and operatorship to PetroChina, which became the lead contractor. In September, Iraq’s federal government reached an agreement with the Kurdistan Regional Government (KRG) and international oil companies to resume crude exports through Turkey that were suspended in 2023. That is expected to eventually return up to 230,000 barrels per day to international markets at a time when OPEC+ oil-producing countries are boosting output to gain market share. (Reporting by Aref Mohammed in Basra and Ahmed Rasheed in Baghdad; additional reporting by Stephanie Kelly in London; Writing by Ahmed Elimam; editing by Elaine Hardcastle, Emelia Sithole-Matarise, Jason Neely and Louise Heavens)

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