Exxon follows China lead in clinching Iraq oil deal

"Today we will sign with the consortium of Exxon Mobil and Shell a preliminary accord for the development of West Qurna 1" in southern Iraq, spokesman Assem Jihad told AFP.

Rival consortiums led by Exxon and by Russia's Lukoil had submitted bids which both met Iraq's conditions for the field, Jihad said last week.

The winning group, in which Exxon holds an 80-percent share and Anglo-Dutch firm Shell the balance, has proposed to boost the field's production to 2.1 million barrels per day (bpd).

West Qurna 1 currently produces about 279,000 bpd and has reserves of around 8.5 billion barrels, according to oil ministry figures.

Ahead of a second round of international bidding for contracts in mid-December, Exxon Mobil and Shell have decided to accept Baghdad's offer of 1.90 dollars per additional barrel extracted from West Qurna 1.

The bidding process has been marked by an aggressive strategy adopted by oil firms from China, for which securing long-term energy supplies for its massive economy is a national security issue.

On Tuesday, Baghdad formally signed a deal with Britain's BP and China National Petroleum Corp (CNPC) to almost triple production at the giant Rumaila oilfield, also in the south, in a 50-billion-dollar investment.

With China leading the way, the 20-year contract is expected to boost output at Rumaila from the current one million bpd to around 2.8 million bpd within the first six years.

"What is striking is the strong showing of Chinese companies in a sector which up until its total nationalisation in 1975 had been the preserve of the British," said Ruba Husari, founder of the Iraq Oil Forum website.

CNPC is already operating in the centre of the country, having sealed the first energy deal by a foreign company since the US-led invasion that ousted Saddam Hussein in 2003.

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