American energy giant Exxon Mobil will on Thursday hand over part of its controversial stake in a massive oilfield in south Iraq to Chinese firm PetroChina, a statement said.
The sale of part of Exxon’s 60 percent stake in the West Qurna-1 field, one of Iraq’s biggest, comes amid a row with Baghdad’s central government over the US firm’s contracts with the autonomous northern region.
A statement issued by the office of Hussein al-Shahristani, Iraq’s deputy prime minister responsible for energy affairs, after a meeting with PetroChina’s Iraq chief Wang Shali, said Thursday would “witness the signing of the final agreement between her company and Exxon Mobil”.
The deal will see PetroChina take a 25 percent stake in the consortium of companies working on West Qurna-1, but Exxon will also retain a similar share.
In January 2010, Iraq completed a deal with Exxon and Anglo-Dutch giant Shell to develop production at the field, which has proven reserves of 8.5 billion barrels of oil.
In October 2011, however, Exxon signed an oil exploration deal with the Kurdistan region in northern Iraq covering six areas, including two that are claimed by both Baghdad and Kurdistan.
The Kurdish deal infuriated Baghdad, which says all oil contracts must go through the central government and regards any that do not do so as illegal.
Iraq has repeatedly given an ultimatum to Exxon to either sell its stake in West Qurna-1 or give up its Kurdish deals, but has never set a deadline or outlined any potential consequences.
The American energy firm nevertheless told Baghdad a year ago that it was looking to sell its stake.
It was not immediately clear if Exxon’s sale of part of its stake to PetroChina would resolve the dispute with the Iraqi authorities.
Iraq is heavily reliant on oil production for state revenues, and is looking to dramatically ramp up crude output in the coming years to fund much-needed reconstruction of its conflict-battered economy.