PetroChina to join giant Iraqi oilfield

BEIJING/MOSCOW - Reuters

China’s PetroChina expands its presence in Iraq, with joining Exxon in developing a new field, according to sources. REUTERS photo

China’s biggest energy firm PetroChina will join Exxon Mobil in developing Iraq’s giant West Qurna oilfield and is in talks with Russia’s Lukoil to buy into a second project at the field, industry sources said.

China is already the top foreign player in Iraq’s oilfields. A deal at West Qurna, which is around 50 km northwest of the southern oil hub of Basra, would boost its dominance and could make PetroChina the biggest single foreign investor in Iraqi oil.

West Qurna is central to Iraq’s oil expansion plans, with enough reserves to pump more than 5 million barrels per day (bpd), and it could rival the world’s biggest producer, Saudi Arabia’s Ghawar field, when its two phases are running fully.

“PetroChina will participate in developing the field,” an industry source with direct knowledge of the deal with Exxon said on Friday.

The agreement would be announced in weeks, the source said, but declined to give further details on how the world’s two most valuable listed energy firms would work together in Iraq. Both PetroChina and Exxon declined to comment.

PetroChina already partners BP at Rumaila, now Iraq’s largest producer, and operates the Halfaya and al-Ahdab fields. The company was the first foreign firm to sign an oil service deal in Iraq after U.S.-led forces toppled Saddam Hussein.

Baghdad signed a series of service contracts in 2009 that committed international oil companies to raising Iraq’s oil output by 2017 beyond 12 million bpd - more than Saudi Arabia produces now.
Infrastructure and security problems have since forced the government to cut the target to 9 million bpd by 2020. The issues are so acute Iraq could report a year-on-year output fall for 2013, its first after two years of robust gains.

Despite the frustrations, Exxon, which holds a 60 percent stake in West Qurna-1, has made steady progress with minority partner Royal Dutch Shell and the field, a $50 billion investment project, is pumping around 480,000 bpd.

In March, PetroChina’s ex-chairman Jiang Jiemin told Reuters the Chinese energy major was willing to team up with Exxon at West Qurna.