Exxon might sell stake in Iraqi field
Exxon Mobil is considering selling its stake in Iraq’s West Qurna-1 oil field in a sign that the supermajor is willing to part with one its marquee oil fields in the Middle East to reduce the mountain of debt it accumulated last year.
Iraq’s oil ministry took the unusual step of saying it’s in talks with U.S. companies about the possibility of them buying Exxon’s 32.7 percent stake in the field in southern Iraq, near Basra.
China’s oil giants China National Petroleum Corp. and CNOOC Ltd. also are looking at buying the stake, Bloomberg News reported last year.
Exxon declined to comment on any potential sale.
West Qurna-1 was considered one of the oil industry’s glittering prizes in the reconstruction of Iraq after the Second Gulf War, with Exxon becoming lead contractor in 2010. But tough contractual terms, payment delays, OPEC production cuts and political instability have dulled its appeal in recent years.
Meanwhile, COVID-19 had a crushing impact on Exxon’s finances, causing its debt to balloon to more than $70 billion and prompting two downgrades in less than a year from Moody’s Investors Service.
Asset sales are a key part of Exxon’s strategy to reduce that debt, as well as defend its $15 billion-a-year dividend. Those goals are within easier reach now that Brent crude has rebounded to more than $66 a barrel, up 29 percent this year. Exxon’s stake in West Qurna-1 could fetch at least $500 million, Bloomberg reported in November, citing people familiar with the matter.
While the Iraqi field is one of the world’s biggest, with expected recovery reserves of more than 20 billion barrels, ongoing investment is needed to bring those barrels to market.
Exxon has slashed its annual capital spending by some $10 billion a year all the way out to 2025, saying it will focus on its core projects in Guyana and the Permian Basin.
The field’s other owners are PetroChina with a 32.7 percent stake, Japan’s Itochu Corp. with 19.6 percent and PT Pertamina with 10 percent.