Exxon “Nears Sale of South Iraq Stake”

ExxonMobil is in talks to sell its 60% stake in the massive West Qurna-1 oil field, while gearing up to start a controversial drilling program in Iraqi Kurdistan, the Wall Street Journal reports, citing what it described at “people familiar with the matter”.

Exxon’s 2010 deal with the Iraqi central government to improve production in the West Qurna-1 field was never expected to be lucrative under the best of circumstances, one source said. The company would receive $1.90 for each additional barrel of oil they pumped after refurbishing the already-producing field, barely be enough to cover costs.

The Guardian reports that Exxon has informed Iraq’s Deputy Prime Minister for Energy Hussain al-Shahristani and the U.S. State Department of its intentions.

This comes as talks between Erbil and Baghdad aimed at resolving differences over oil rights appear to have stalled again after a brief period of progress.

Shell has a 15% stake in West Qurna-1, with the remaining 25% owned by the Iraqi state oil company; Shell reportedly declined to comment when asked whether it is interested in buying Exxon stake in West Qurna-1 field.

Exxon’s exploratory drilling in Kurdistan could start as soon as early 2013. It has already ordered oil-well casing heads and is negotiating a contract with an oil-services firm, said another person familiar with its operations in the region.

(Sources: Wall Street Journal, The Guardian)

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