ExxonMobil has reportedly reached an agreement with Baghdad to be paid in oil for work on the huge West Qurna-1 oilfield.
According to the report from Reuters, foreign oil companies involved in Iraq’s oil expansion generally prefer to be compensated for capital expenditure and service fees in oil, because cash payments are more complicated to arrange.
BP, which leads the Rumaila project, and Italy’s Eni, leader of the Zubair project, had signed up to Iraq’s oil sales agreement from the outset, the first step towards being paid in crude.
Exxon and minority partner Shell held out as they sought to tighten up some contractual loose ends, said an industry source.
Exxon and Shell spent $910 million on West Qurna-1 last year and were repaid $470 million in cash.
An Iraqi official told Reuters:
“In principle there is agreement, although there is nothing in writing yet … Exxon asked us to rephrase some of the wording, which in general will not affect the provisions of (State Oil Marketing Organization) SOMO’s oil export agreement.“
Exxon Chief Executive Rex Tillerson said last week the company was committed to working in both southern Iraq and Kurdistan.