UPDATE:Iraq To Award West Qurna-1 Field To ExxonMobil,Shell

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   By Hassan Hafidh 
   Of DOW JONES NEWSWIRES 

Iraq is expected to award shortly its super-giant West Qurna-1 oil field in southern Iraq to a consortium comprising Exxon Mobil Corp. (XOM) and Royal Dutch Shell PLC (RDSA), a senior Iraqi oil official told Dow Jones Newswires Wednesday.

In the coming few hours, the oil ministry is expected to award West Qurna-1 to Exxon Mobil and Shell, said the official, who is involved in talks with international oil companies.

Oil ministry officials will meet with Exxon Mobil and Shell representatives Wednesday to finalize the deal before signing an initial agreement, the official said.

West Qurna-1, with estimated proven oil reserves of 8.6 billion barrels, was one of eight oil and gas fields up for auction in June this year. Then only one field Rumaila, Iraq's largest producing oil field, was awarded. The successful bidder, a group made of BP PLC (BP) and China National Petroleum Corp., Tuesday signed a final $15 billon deal to develop the field.

Exxon Mobil and Shell did not secure the field in June because they rejected Iraq's maximum remuneration fee of $1.90 a barrel. The fee was also rejected by groups led by Russia's OAO Lukoil Holdings (LKOH.RS), CNPC, France's Total SA (TOT) and Spain's Repsol SA (REP).

Last month, however, Exxon Mobil and Shell, along with Lukoil and CNPC accepted the ministry's remuneration fee.

Exxon Mobil and Shell proposed in June to raise production from the field to 2.325 million barrels a day in seven years from the current 270,000 barrels a day. That was the best offer.

In its new offer, Lukoil IS said to be proposing a production plateau rate more than that proposed by the Exxon Mobil group. However, according to a tender protocol set by the Iraqi oil ministry for the first bidding round, companies are not allowed to alter production plateau which they bid for in June. They are only allowed to change the remuneration fee.

-By Hassan Hafidh; Dow Jones Newswires; + 962 799 831 831; hassan.hafidh@dowjones.com

(END) Dow Jones Newswires

November 04, 2009 05:12 ET (10:12 GMT)

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