Exxon seeks to quit flagship Iraq oil project

Thu Oct 18, 2012 5:05pm EDT
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By Peg Mackey and Timothy Gardner

LONDON/WASHINGTON (Reuters) - Exxon Mobil wants to leave its giant oilfield project in southern Iraq, diplomatic sources said, in a move likely to aggravate the country's internal tensions and hamper Baghdad's ambitious energy expansion plans.

The desire of the world's largest publicly traded oil company to quit was due to prospects of slim profits from the estimated $50 billion West Qurna-1 project, the sources said. An exit from the project would contrast with a deal Exxon signed a year ago to explore in Iraq's autonomous northern Kurdish region, where incentives are better.

Baghdad deemed the Kurdish deal illegal and promised to punish Exxon by ripping up its contract for West Qurna-1, which has reserves of 8.7 billion barrels.

Executives at the company this week told U.S. State Department officials it was looking to sell its 60 percent stake in the project, diplomats from two Western countries said.

"Exxon is telling Baghdad: 'We are letting you know we're looking to leave,'" one of the diplomats said. "They are shopping around and looking at all the options."

The company declined to comment, as did the U.S. State Department.

The departure of Exxon from southern Iraq now hinges on its ability to find a company willing to buy out its stake in West Qurna-1, industry sources say.

"If they can find the right buyer, they will pull out," said an industry executive. "It's an unusual move for Exxon. They usually don't give up."   Continued...

An Exxon gas station is pictured in Arlington, Virginia January 31, 2012. REUTERS/Jason Reed