Chinese energy giant PetroChina Co. Ltd. (PTR) has acquired a 25% interest in the West Qurna-1 oilfields in Iraq from U.S. oil major Exxon Mobil (XOM). However, the financial details of the deal were not disclosed.
The deal should help PetroChina to set a stronger foothold in Iraq and synergize with its other projects in the nation. This should also aid the Chinese government which has become a significant importer of Iraqi crude. With a slowdown in domestic oil output, China is looking at other international oil fields to meet its energy demands.
PetroChina expects that by 2015, overseas production would comprise half of its business. Accordingly, PetroChina and its parent company, China National Petroleum Co., have invested around $37 billion in oil and gas properties since 2009.
Exxon has sold another 10% of its stake in this oil rich field to state owned Indonesian oil and natural gas company, PT Pertamina. Exxon will continue to act as the operator with its reduced holding of 25%. Other parties in the oilfield include Royal Dutch Shell (RDS.A) and Iraq’s state-owned South Oil Company.
The West Qurna-1 oilfield is located near the Rumalia field, in Basra, where PetroChina is currently operating along with BP plc (BP). The oilfield currently produces 510,000 barrels per day and some believe that it has the potential to yield 3 million barrels of crude per day.
PetroChina is the largest integrated oil company in China. The company’s activities include exploration, development, production and sale of crude oil and natural gas; refining, transportation, storage and marketing of petroleum products; manufacture and sale of chemical products; and transmission of natural gas, crude oil and refined products.
PetroChina currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.