US-based Exxon Mobil may leave the $50bn West Qurna-1 project located in southern Iraq over possibility of slim profits from the venture.
In 2011 the company signed a deal to explore in Iraq’s autonomous northern Kurdish region where incentives are better, however the federal government deemed the deal illegal.
Iraq Prime Minister Nuri al-Maliki has said Exxon Mobil’s action are a threat to peace and has asked the US President, Barack Obama, to force the company to pull out of West Qurna.
Exxon is planning to sell its 60% stake in the West Qurna-1 project, which has reserves of 8.7 billion barrels.
An unnamed diplomatic source was quoted by Reuters as saying that "Exxon is telling Baghdad: ‘We are letting you know we’re looking to leave,’" adding "They are shopping around and looking at all the options."
The US State Department and Exxon Mobil declined to comment on the issue.
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By GlobalDataAn industry executive said, "If they can find the right buyer, they will pull out," adding "It’s an unusual move for Exxon. They usually don’t give up."
The federal government of Iraq is looking at replacing Exxon with companies from Russia, or even China.
West Qurna-1 currently pumps about 400,000 barrels per day of Iraq’s overall production of just over 3 million barrels per day.
Royal Dutch Shell has a minority stake in the West Qurna project, where both companies have spent $1bn up until 2011.
In 2010, both companies signed up for the project, which targets output of 2.825 million barrels per day by 2017.
US Secretary of State Hillary Clinton in a speech on energy diplomacy praised Iraq’s progress in increasing oil output by 900,000 barrels per day to the current 3.2 million barrels per day.
In 2011, The US Departments of State and Energy had added an energy diplomacy office which aided the Iraqi government to identify infrastructure bottlenecks and improve investment plans to market oil.
Image: ExxonMobil offices in Downtown Houston in Texas, US. Photo: WhisperToMe.
