An Exxon Mobil-led consortium has beaten rival Russian, French and Chinese groups to bag initial rights to develop Iraq's West Qurna field, the oil ministry said, adding momentum to Iraq's bid to unlock its oil riches.
With reserves of 8.7 billion barrels, West Qurna is among the prized Iraqi fields eyed by Western oil majors as they face flat or lower output at home and stiff competition from Chinese and Indian oil companies in bidding for oilfields elsewhere.
"The consortium led by Exxon Mobil, which includes Shell, won the contract to develop West Qurna Phase One oilfield," Oil Ministry spokesman Asim Jihad said on Thursday.
The initial deal will be signed at 1400 local time (1100 GMT) and still needs cabinet approval, he said.
The 20-year contract is part of a raft of deals Iraq is close to formalizing in a bid to catapult itself to the world's No. 3 oil producer after decades of war and economic decline.
There is no guarantee that Iraq's next government, to be chosen in a January vote, will honor the deals, but it injects optimism into prospects for Iraq's battered oil sector and a second oil bid round in December after a lackluster June auction.
Exxon, partnering Royal Dutch Shell, beat Russia's LUKOIL, which had teamed up with No. 3 U.S. oil major ConocoPhillips, and two other groups led by France's Total and China's CNPC.
Exxon's output target of 2.1 million barrels per day (bpd) for West Qurna Phase One won against those of its rivals and allowed it to clinch the contract, said an Iraqi oil official, who was part of the negotiating team.
"This is better for us," the Iraqi official said. "We need higher production. This is a supergiant field and it has the capacity to produce even more than the target set by Exxon."
West Qurna 1 currently produces about 279,000 bpd and has reserves of around 8.5 billion barrels, according to oil ministry figures.
On Tuesday, Baghdad signed a deal with Britain's BP and China's CNPC to almost triple production at the giant Rumaila oilfield, also in the south of the country.
"The two companies will invest 50 billion dollars in the project," Oil Minister Hussein al-Shahristani said.
The 20-year contract is expected to boost production at the Rumaila field from the current one million bpd to around 2.8 million bpd within its first six years, he said.