Exxon Sells Iraq Stake To PetroChina

Updates

November 30, 2013: Michael Fitzsimmons, over at SeekingAlpha, has a nice commentary on this deal.

4-traders.com reports a landmark multi-billion dollar energy deal has been struck between Turkey and Iraqi Kurdistan. The state-backed Turkish Energy Company has signed a contract to operate 13 exploration blocks in northern Iraq and is teaming up with Exxon Mobil in about half of them. After years of being bogged down in low margin Iraqi projects, this is a coup for Exxon and a positive catalyst going forward. The deal will likely benefit Chevron as well.

Back in January, I wrote Exxon And The KRG Need A Pipeline and explained why the only thing keeping the oil riches of Kurdistan from being exploited was a secure pipeline to world markets independent of the Baghdad government to the south. The existing pipeline (see map) used to carry 1.6 million bpd of Iraqi oil to the global market, earning nice transit fees for Turkey. At the time of the article, wars and saboteurs had left the Iraqi section of the pipeline in shambles. One of the two parallel pipelines was totally empty and the other was running at a small fraction of capacity.

Original Post

Yahoo!News/AFP is reporting:

American energy giant Exxon Mobil on Thursday sold part of its controversial stake in a massive Iraqi oilfield to PetroChina and Indonesia's Pertamina amid a long-running row with Baghdad.

The sale of the stake in the West Qurna-1 field in south Iraq, one of the country's largest, marks a key step towards resolving the dispute with the central government over Exxon's contracts with the autonomous Kurdish region.

"The agreement was signed for Exxon Mobil to sell part of its 60 percent stake," oil ministry spokesman Assem Jihad told AFP.

"Representatives of all the companies signed the deal today with the Iraqi government in the ministry."

PetroChina takes a 25 percent stake in the oilfield, while Pertamina will hold 10 percent, thereby reducing Exxon's share to 25 percent.

An earlier post, January 23, 2013, has a bit more, leading up to this.