Exxon-led group clinches Iraq's W.Qurna contract

An Exxon Mobil-led consortium has beaten rival Russian, French and Chinese groups to bag initial rights to develop Iraq's West Qurna field, the oil ministry said, adding momentum to Iraq's bid to unlock its oil riches.

With reserves of 8.7 billion barrels, West Qurna is among the prized Iraqi fields eyed by Western oil majors as they face flat or lower output at home and stiff competition from Chinese and Indian oil companies in bidding for oilfields elsewhere.

"The consortium led by Exxon Mobil, which includes Shell, won the contract to develop West Qurna Phase One oilfield," Oil Ministry spokesman Asim Jihad said on Thursday.

The initial deal will be signed at 1400 local time (1100 GMT) and still needs cabinet approval, he said.

The 20-year contract is part of a raft of deals Iraq is close to formalising in a bid to catapult itself to the world's No. 3 oil producer after decades of war and economic decline.

There is no guarantee that Iraq's next government, to be chosen in a January vote, will honour the deals, but it injects optimism into prospects for Iraq's battered oil sector and a second oil bid round in December after a lacklustre June auction.

Exxon, partnering Royal Dutch Shell, beat Russia's LUKOIL -- which had teamed up with No. 3 U.S. oil major ConocoPhillips -- and two other groups led by France's Total and China's CNPC.

Exxon's output target of 2.1 million barrels per day (bpd) for West Qurna Phase One won against those of its rivals and allowed it to clinch the contract, said an Iraqi oil official, who was part of the negotiating team.

"This is better for us," the Iraqi official said. "We need higher production. This is a supergiant field and it has the capacity to produce even more than the target set by Exxon."

The pact on West Qurna comes after British oil major BP Plc and China's CNPC on Tuesday signed Iraq's first major new oil deal since the 2003 US invasion for Rumaila.

A group led by Italian oil major Eni also signed an initial agreement on Monday to develop the Zubair oilfield, and Iraq said it also expected to ink an agreement with Nippon Oil Corp on Nassiriya in the coming days.

Analysts said the raft of deals ahead of the January 16 poll in Iraq was no coincidence. Companies are eager to quickly lock away deals on oilfields to cement their position, but are not expected to make major investments until the vote's outcome.