Iraq approves sale of Exxon oil field to state-owned firm

(Bloomberg) --Iraq approved a state company’s potential purchase of Exxon Mobil Corp.’s interest in a huge oil field in the south of the country.

The cabinet on Wednesday approved a proposal for Iraq National Oil Co. to start the process of acquiring the stake, Oil Minister Ihsan Abdul Jabbar said in a statement. He didn’t say if INOC had made a formal offer to Exxon or if it had been accepted.

Exxon entered into an agreement to sell its 32.7% stake in the West Qurna-1 field to Chinese firms PetroChina Co. and CNOOC Ltd. in January last year, but failed to get the Iraqi government’s support for the deal. An Exxon spokesperson said via email that the company doesn’t comment on commercial matters.

While West Qurna-1 is one of the world’s biggest oil deposits, with expected recoverable reserves of more than 20 billion barrels, it needs billions of dollars of investment.

Exxon was among the first Western oil explorers allowed into Iraq in 2010 as the Middle Eastern nation sought to rebuild its energy industry following the fall of Saddam Hussein and years of conflict. Before that, Iraq’s crude bounty had been mostly off limits to foreigners for around 40 years. But the company soured on West Qurna amid tough contractual terms, OPEC supply constraints and ongoing political instability.