Exxon Mobil (NYSE:XOM) plans to sell its stake in a major oil development project in Iraq.
The energy giant sent a letter to Iraq’s Oil Ministry revealing that it’s in negotiations with other oil firms to dispose of its interest in the $50 billion West Qurna-1 oilfield, which currently produces 400,000 barrels of crude every day, Reuters said.
With Exxon withdrawing from the project, plans to boost Iraq’s oil output from a current level of 3.4 million barrels per day to between 5 million and 6 million barrels are now in jeopardy.
Exxon had partnered with Royal Dutch Shell (NYSE:RDS.A, RDS.B) to develop the Qurna-1 oilfield. Industry watchers said potential buyers of Exxon’s majority share included Chinese and Russian oil firms, particular Russia’s Lukoil, which is working to develop the nearby West Qurna-2 field.
The situation at West Qurna-1 also complicates a long-simmering dispute between Iraq’s central government in Baghdad and Kurdish regional leaders over who has the right to control development of the country’s oil reserves. Exxon had made agreements with local Kurdish leaders that the central government refuses to recognize.
Shares of Exxon Mobil fell more than 1% in Wednesday morning trading.