Pertamina Said to Join Exxon Project in Iraq


By Charlie Zhu & Peg Mackey on 8:48 pm August 22, 2013.
Category Business, Corporate News
Tags: Indonesia oil and gas industry, Pertamina


China and Indonesia are set to join Exxon Mobil’s $50 billion project to develop a giant oil field in Iraq, company and industry sources said on Thursday.

Various scenarios for farming out Exxon’s 60 percent stake in the West Qurna-1 oil field are still under discussion, but at this stage China’s biggest energy firm PetroChina is expected to take 25 percent and Indonesia’s state-owned Pertamina 10 percent, they said.

Exxon would remain operator of the southern field, key to Iraq’ oil expansion plans, though its share could be cut to 25 percent. Royal Dutch Shell would retain its existing 15 percent share.

China is already the top foreign player in Iraq’s oil fields and such a big stake in West Qurna-1, around 50 kilometers northwest of the southern oil hub of Basra, would make PetroChina the single biggest foreign investor in Iraqi oil.

PetroChina confirmed it was in talks for a stake in West Qurna-1 at its interim results briefing on Thursday, though its president, Wang Dongjin, did not disclose the size.

For Pertamina, the deal could be its largest foreign acquisition and mark its first move into Iraqi oil and gas since US-led forces toppled leader Saddam Hussein in 2003. Iraqi oil would help Indonesia meet soaring fuel demand as Southeast Asia’s largest economy grows. Former OPEC-member Indonesia was once itself a big oil exporter, but it is struggling to arrest declining oil and gas output from its aging fields. The country already imports a million barrels a month of Iraqi oil.

Economic Minister Hatta Rajasa said in March that Pertamina was interested in buying into the project and was negotiating a 10 percent to 20 percent stake.

An Exxon Mobil spokesman declined to comment. A Pertamina spokesman said he was unaware of the deal.

Last year, Exxon offered to sell its entire 60 percent stake in West Qurna-1 after a dispute with Baghdad over contracts it signed with the autonomous Kurdistan in the north, deals which the central government rejects as illegal.

The US oil company later committed to further investment at the field — now pumping just under 500,000 barrels a day — and stepped back from making a full exit, talking to potential buyers about smaller stake sales.

Iraq’s oil fields are the largest in the Middle East open to foreign investment. The reserves are an alluring prospect for energy firms seeking to secure future oil supply, despite tough contract terms imposed by Baghdad.

Reuters

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