Iraq set to buy ExxonMobil $350 million share of Basra oilfield

Oil giant ExxonMobil has received an offer for its share of the West Qurna 1 oilfield in Basra, by Iraq, according to reports by Reuters. 

The head of the state-run oil operating company said on Monday that a formal offer, priced at $350 million, to buy the share had been made by Iraq.

"A decision has been made and we sent a formal letter to ExxonMobil asking to buy its share," said Khalid Hamza, director of the Basra Oil Company, in an interview with Reuters.  

ExxonMobil currently owns a 32.7 percent share in the West Qurna 1 oilfield, but indicated last month that it was looking to sell. 

The decision to sell is a sharp turn from its plans in 2019, when it was going to invest $53 billion into a project, which was aimed at boosting Iraq’s oil output.  

If the sale proceeds, then the Basra Oil Company (BOC) has said that it intends to cooperate with the other shareholders in the field. 

Currently, Petrochina hold a 32.7 percent stake, Japan's Itochu Corp hold 19.6 percent and Indonesia's Pertamina has 10 percent. 

The remaining five percent is controlled by Iraq’s Oil Exploration Company. 

Oil continues to represent a vital source of income for Iraq, with oil revenues making up at least 95 percent of its income. 

Iraq, the Organisation of the Petroleum Exporting Countries' (OPEC) second-biggest producer, was hit hard by the fall in demand due to the Covid-19 pandemic, but is hoping for a rebound in production. 

With markets beginning to recover, OPEC and allied producers have announced that from 1 May, output will be increased.

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According to Hamza, the 2021 investment budgets of the international oil companies for the development of southern Basra oilfields managed by BOC, have been approved by Iraq, and are estimated at around $7 billion. 

He added that light production would also increase by 100,000 barrels per day (bpd) making a total of 1.1 million bpd. 

Total oil exports fell in May to an average of 2.85 million bpd, down from April’s average of 2.9 million bpd. 

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