Iraq, Exxon sign deal to help develop large oilfield

BAGHDAD,— Exxon Mobil has signed a preliminary agreement with Iraq to help develop the giant Majnoon oil field and expand crude exports, Iraqi officials said Wednesday.

The move signals the U.S. energy company’s return to the country two years after it pulled out of one of its major projects.

The non-binding arrangement, according to Iraq’s Oil Ministry, allows Exxon to explore opportunities for development, production and oil marketing.

The deal follows a series of similar agreements Baghdad has reached with other energy firms including Chevron, BP and TotalEnergies as Iraq seeks to raise production by offering more favorable terms to international investors.

Iraq has some of the largest proven oil and gas reserves in the world. At its peak, Baghdad once aimed to rival Saudi Arabia with output of 12 million barrels per day.

Current production stands at about 4 million barrels daily, with plans to increase to more than 6 million barrels by 2029. Progress has been slowed by bureaucracy, corruption, years of conflict and aging infrastructure.

The Majnoon field, located about 60 kilometers from Basra in southern Iraq, is considered one of the largest globally, with estimated reserves of 38 billion barrels. Iraqi analysts say Exxon’s involvement represents both economic and political significance.

“The agreements underline Baghdad’s intent to modernize its energy sector and improve ties with the United States,” said Muwafaq Abbas, a former operations manager at Basra Oil Company.

Prime Minister Mohammed Shia al-Sudani confirmed the agreement during a statement Wednesday, but gave no details. An Exxon spokesperson later said the company was pleased to sign a heads of agreement with Iraq’s Oil Ministry.

According to four sources familiar with the matter, the arrangement is expected to include a profit-sharing structure and upgrades to export infrastructure in southern Iraq.

Officials said Iraq’s state marketing firm SOMO is also preparing an accord with Exxon to secure storage capacity in Asia, including facilities in Singapore. SOMO has not commented.

Exxon was among the first major Western firms to enter Iraq after the 2003 U.S.-led invasion, but later withdrew from the West Qurna project over what officials described as low returns. It also attempted exploration in the Kurdistan Region, but pulled back after poor results.

Earlier this month, Baghdad reached an agreement with the Authority in Kurdistan region and international operators to restart oil exports through Turkey, which had been halted in 2023.

The resumption is expected to add as much as 230,000 barrels per day to global markets, coinciding with production increases by OPEC+ countries.

(With files from Reuters)