LONDON/WASHINGTON (Reuters) - Exxon Mobil wants to leave its giant oilfield project in southern Iraq, diplomatic sources said, in a move likely to aggravate the country's internal tensions and hamper Baghdad's ambitious energy expansion plans.
The desire of the world's largest publicly traded oil company to quit was due to prospects of slim profits from the estimated $50 billion West Qurna-1 project, the sources said. An exit from the project would contrast with a deal Exxon signed a year ago to explore in Iraq's autonomous northern Kurdish region, where incentives are better.
Baghdad deemed the Kurdish deal illegal and promised to punish Exxon by ripping up its contract for West Qurna-1, which has reserves of 8.7 billion barrels.
Executives at the company this week told U.S. State Department officials it was looking to sell its 60 percent stake in the project, diplomats from two Western countries said.
"Exxon is telling Baghdad: 'We are letting you know we're looking to leave,'" one of the diplomats said. "They are shopping around and looking at all the options."
Industry sources said Baghdad is keen to replace Exxon with companies from Russia, or even China, to teach Western oil majors a lesson. This could alter the diplomatic and political influences in Iraq but, technologically, Chinese and Russian companies may have less to offer the oil sector.
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