Commentary
Wil Crisp
Oil & gas reporter

The recent announcement that Iraq’s cabinet has approved a “final settlement agreement” with ExxonMobil regarding the West Qurna-1 oil field could pave the way for the firm’s exit from the country, according to stakeholders.

Although the settlement deal was announced without fanfare and little is known about what it includes, its approval marks “a significant breakthrough” in the US oil company’s efforts to exit the field.

“This announcement is something that all of the stakeholders are taking very seriously,” said one source. “In the wake of the announcement, there have been meetings between contractors and other entities involved in the operation and development of the West Qurna-1 field.

“Right now, it remains unclear what the next steps will be, but everyone is viewing this as an important step for the future of ExxonMobil in Iraq and the future of the West Qurna oil field.”

The settlement agreement that has been approved relates to issues between state-owned Basra Oil Company (BOC) and ExxonMobil.

Exxon’s plan to exit the West Qurna-1 oil field was first announced in April 2021, when Iraq’s Oil Ministry said ExxonMobil was considering selling its 32.7 per cent stake in the oil field.

In September last year, ExxonMobil’s efforts to exit the field were dealt a setback by a court decision that ruled against the re-establishment of Iraq National Oil Company (INOC),

Before the court decision, it was expected that INOC would play a key role in transferring ownership from ExxonMobil.

In August last year, the deputy director general of BOC, Hassan Muhammad Hassan, said neither Exxon nor BOC had signed “a settlement agreement” – and signalled that this was a key sticking point in progressing the US oil company’s exit from the field.

Now that a settlement deal has been agreed upon and approved, it is possible the deal will progress more rapidly.

Speaking at a conference in London in October last year, Exxon’s vice-president of global exploration, John Ardill, made it clear that continuing involvement in West Qurna-1 was not part of the company’s strategy.

He said that ExxonMobil had prioritised developing assets in the US Permian Basin and offshore Guyana as it looked to exit Iraq.

He said West Qurna-1 had “huge potential to grow”, but the US-based international oil company only had “a finite amount of capacity around the world”.