ExxonMobil bulking up on reserves again

ExxonMobil does not make investments lightly – and it’s been reluctant to acquire new resources for years now. So to see it winning the right to develop Iraq’s giant West Qurna oil field means there must be a lot of potential there. Exxon can afford to pay for a field worth having.

Exxon beat out ConocoPhillips and Lukoil for the project, in the third such deal this year – but the first to be led by a US company. It marks the first time a US-led consortium of companies will re-enter Iraq’s oil industry in more than 30 years. Exxon must believe the administration is ready to do business with. Patrick McGinn, Exxon spokesman, made that clear that the company had “agreed with the Ministry of OIl on the principles of the rehabilitation and development of the West Qurna field”.

Things have not been going as smoothly for Exxon in Ghana, where it is trying to get into the newly discovered oil coast, stretching from Ghana to Sierra Lione. Kosmos, backed by private equity groups Blackstone and Warburg Pincus, agreed last month to sell its stake to Exxon in a deal believed to be worth $4bn. But the Ghanaian government has raised objections, and is now in talks with several foreign companies, including BP, who have expressed interest in a stake in the country’s offshore Jubilee field. The talks are being held in anticipation that Exxon’s attempt to buy the stake may fail.

In its quarterly news conference with journalists last week, following the release of its financial results, Exxon refused to comment on how the talks were going. The industry says there has been much talk that Exxon is going to get the Obama Administration fighting for it, given that President Barack Obama recently visited Ghana. The word is that the US embassy in Ghana is about to be be flooded with Exxon officials pleading their case.

Whether that unfolds as people are predicting, or whether Exxon gets the stake at all, depends on how much the company thinks it is worth. Certainly the field alone would not be worth a bidding war, but if the Jubilee field is truly part of a massive oil coast, it may fight to win.

And as Iraq’s recent awarding underlines, Exxon usually gets what it wants.

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