PetroChina To Acquire Exxon Mobi1's 25% Stake In Iraq Oil Field

(RTTNews) - Chinese oil and gas company PetroChina Co. Ltd. (PTR) said Thursday that it has acquired a 25 percent stake in Iraq's West Qurna-1 oilfield from a subsidiary of oil and natural gas giant Exxon Mobil Corp. (XOM). Financial terms of the deal were not disclosed.

PetroChina, owned by China National Petroleum Corp., noted that its entry into the West Qurna-1 or WQ1 oilfield project would enable the company to achieve synergies with its other projects in Iraq, and also help it to develop a larger as well as stronger presence in the upstream operations in the Middle East.

Meanwhile, ExxonMobil has reportedly sold another 10 percent stake in WQ1 to PT Pertamina of Indonesia. However, the company will continue as the operator of the project with its remaining 25 percent stake.

West Qurna is one of Iraq's largest oil fields and is believed to hold 43 million barrels of recoverable reserves, making it the second largest field in the world after Saudi Arabia's Ghawar oil field. The WQ1 oilfield is located about 50 kilometers to the northwest of Basra and close to the north of Rumaila field where PetroChina is operating in Iraq.

In January 2010, ExxonMobil Iraq Ltd. signed an agreement with the South Oil Company of the Iraq Ministry of Oil to rehabilitate and redevelop the West Qurna I field in southern Iraq.

The West Qurna I contractor consortium had included ExxonMobil as the lead contractor with a 60 percent stake, the Oil Exploration Company of Iraq with a 25 percent stake, and Shell West Qurna B.V., a Royal Dutch Shell affiliate with a stake of 15 percent.

Media reports had earlier indicated, quoting Iraq's Deputy Prime Minister for Energy, that Exxon Mobil would divest a 25 percent stake in Iraq's West Qurna-1 oilfield project to PetroChina. Apart from the sale of interest to PetroChina, ExxonMobil was expected to sell another 10 percent stake to Indonesia's Pertamina.

In August 2013, Iraq said that Exxon will part with more than half of its 60 percent stake in the WQ1 oilfield. The move followed ExxonMobil's growing tensions with the Iraqi government since last year after the company signed a deal with Iraq's autonomous region of Kurdistan to explore and develop its oil reserves.

The Iraqi government then warned ExxonMobi1 to choose between the WQ1 oilfield and Kurdistan. ExxonMobi1 offered to sell its stake in the WQ1.

On the other hand, PetroChina as well other Chinese companies are scouting the globe for acquisitions in order to cater to growing demand from the world's second-largest economy. PetroChina is said to have earmarked nearly $16 billion for overseas investment this year as it aims to have half its production outside China within eight years.

In mid-November, PetroChina said it agreed to acquire the entire shares of Petrobras Energia Peru S.A. for a consideration of about $2.6 billion. Petrobras Energia Peru is an indirect wholly-owned subsidiary of Petróleo Brasileiro S.A. or Petrobras, which is primarily engaged in the exploration and production of oil and gas in Peru.

XOM closed Wednesday's trading at $93.80, down $0.47 or 0.50 percent on a volume of 8.83 million shares, while PTR closed trading at $119.06, up $0.59 or 0.50 percent on a volume of 69,158 shares.