Exxon Mobil, Shell win Iraqi oil contract

Nov 5, 2009, 14:12 GMT

Baghdad - A consortium of oil companies led by Exxon Mobil on Thursday signed a contract to develop one of Iraq's largest oil fields, a spokesman for the Oil Ministry said.

The consortium, which also includes Royal Dutch Shell, agreed to boost production from West Qurna oil field from its current level of 160,000 barrels per day (bpd) to 2.325 million bpd over the course of its 20-year contract, Oil Ministry spokesman Assim Jihad told the German Press Agency dpa.

Jihad said Exxon and Shell's offer to boost production so significantly had helped it beat Russian energy giant Lukoil in bidding for the contract, which began last June.

Thursday's deal, which must still be approved by the cabinet, is the second major oil contract to be awarded to an international consortium this week.

On Tuesday, a consortium led by British Petroleum (BP) and China's CNPC became the first international group to finalize an oil contract with the Iraqi government since Iraq nationalized its country's petroleum resources in 1972.

Iraq relies on the 2.5 million bpd it produces for more than 90 per cent of its government revenue and about 60 per cent of its Gross National Product. If the companies can deliver on their promises, the two contracts signed this week would double Iraq's production.

Yet there is real domestic opposition to foreign oil companies' re-entrance to the market.

The Iraqi Federation of Oil Unions has opposed the contracts, and has threated to strike if they were approved. It also remains unclear whether future governments, including the one to be chosen in the next January's elections, will honour contracts signed now.