A worker checks the valve of an oil pipe at Nahr Bin Umar oil field, north of Basra, Iraq.
Essam Al-Sudani | Reuters
Exxon Mobil signed an agreement with Iraq on Wednesday to help it develop its giant Majnoon oilfield and expand oil exports, government officials and sources said, marking the U.S. major’s return to the country two years after leaving.
The non-binding agreement with Exxon, a U.S. major, follows a string of deals with other oil companies, including Chevron, BP and TotalEnergies, as Iraq seeks to accelerate oil and gas production by offering more generous terms.
Iraq holds some of the world’s largest oil and gas reserves and once aspired to rival Saudi Arabia with output of up to 12 million barrels per day.
It currently produces around 4 million bpd and aims to exceed 6 million bpd by 2029, although progress has been hampered by red tape, corruption, infrastructure bottlenecks, years of conflict and sectarian tensions.
Majnoon, located 60 km (37 miles) from Basra in southern Iraq, is one of the biggest oilfields in the world with an estimated 38 billion barrels in place.
The agreement reflects Iraqi officials’ push to modernize the country’s energy sector and improve relations with Washington, said Muwafaq Abbas, an oil analyst and a former crude operations manager at state-run Basra Oil Company.
“The deals carry political weight, signaling Baghdad’s intent to rebalance regional ties and deepen its integration with Western markets,” Abbas said.
Iraqi Prime Minister Mohammed Shia al-Sudani announced the deal with Exxon on Wednesday but did not provide details.
“We are pleased to have signed an HOA (Heads of Agreement) with the Iraqi Oil Ministry to evaluate exploration, development and oil marketing opportunities in Iraq,” an Exxon spokesperson said.
Exxon secures profit-sharing and export rights
The agreement will involve a profit-sharing agreement covering crude oil and refined products and plans to upgrade Iraqi oil export infrastructure in the south, according to four sources with knowledge of the matter.
Iraq’s state oil company SOMO will also sign an agreement with Exxon to secure storage capacity in the Asian market, the sources said.
SOMO did not immediately respond to Reuters requests for comment.
SOMO could use Exxon’s storage in Singapore, Iraqi state news agency INA reported in September.
Exxon was one of the first Western oil firms to enter Iraq to develop oil fields after the U.S. invasion in 2003. But it left the West Qurna project due to what sources described as poor returns.
It also tried to develop fields in Iraq’s semi-autonomous region of Kurdistan despite Baghdad’s ire but also left those projects due to what sources said were poor exploration results.
After exiting Iraq’s giant West Qurna 1 oilfield, Exxon transferred its remaining stake and operatorship to PetroChina, which became the lead contractor.
In September, Iraq’s federal government reached an agreement with the Kurdistan Regional Government (KRG) and international oil companies to resume crude exports through Turkey that were suspended in 2023.
That is expected to eventually return up to 230,000 barrels per day to international markets at a time when OPEC+ oil-producing countries are boosting output to gain market share.