Iraq signs West Qurna Phase One oilfield contracts with Exxon, Shell

US oil major, Exxon Mobil and Anglo Dutch petroleum company Royal Dutch Shell today signed final contracts for the development of Iraq's giant West Qurna phase 1 oilfield.

In November, ExxonMobil and Shell beat rival consortiums from Russia, France and China to secure initial rights to develop Iraq's giant West Qurna phase 1 oilfield, one of the largest in the country. (See: ExxonMobil, Shell bag Iraqi West Qurna oilfield contract)

Both oil majors had said that they would spend £50 billion on developing the country's second-biggest oilfield, believed to hold approximately 8.5-billion barrels of untapped oil.

The joint venture, where ExxonMobil will be holding an 80-per cent stake and Shell 20 per cent, have proposed to boost production to 2.325 million barrels per day from the current less than 500,000 bpd.

Under the service contract, Exxon Mobil group would not share the oil production, but only be paid fees of $1.9 per extra barrel produced.

During the June bidding, both Exxon and Lukoil had cast their eyes on the massive West Qurna oil field, where Exxon had initially proposed a payment of $4-a-barrel for new production, while Lukoil had offered $6.49 a barrel.

Exxon's proposed output target of an additional 2.325 million bpd from the current less than 500,000 bpd for West Qurna Phase One was far higher than those of its rivals, which ultimately clinched the contract for the Exxon led consortium. Lukoil led consortium had offered 1.5 million barrels a day.

Iraq, after decades of war and economic sanctions, holding approximately 115 billion barrels of oil in reserves has the world's third largest oil reserves. It plans to increase crude production to 7 million barrels a day during the next six years from the current 2.5 million barrels a day.