A Chinese Oil Company May Buy Exxon's Iraq Stake

A little more than a year after President Barack Obama declared the end of the war in Iraq, Chinese companies are top players in the country’s oil sector. China National Petroleum Corp. (CNPC) is jointly operating three fields in the south producing 1.4 million barrels a day—more than half Iraq’s output. China and Malaysia have the largest share of international contracts, says Abdul Mahdy al-Ameedi, an official in the Iraqi Oil Ministry. “We are very much satisfied with the work of Chinese companies,” says al-Ameedi, who is in charge of petroleum contracts and licensing.

Now a Chinese oil major may purchase ExxonMobil’s position in the West Qurna 1 field, which has reserves worth $50 billion. Derek Scissors, a senior research fellow at the Heritage Foundation who specializes in China’s state-owned enterprises, spoke in December with a Chinese oil executive whose company was negotiating with the Iraqis over Exxon’s stake. The Chinese executive warned it was not a done deal, says Scissors. The Iraqi Oil Ministry and Exxon wouldn’t comment on a possible agreement.