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By Hassan Hafidh
Of DOW JONES NEWSWIRES
A consortium led by U.S. oil major Exxon Mobil Corp. (XOM) and Royal Dutch Shell PLC (RDSA) Thursday signed an initial 20-year agreement with Iraq to develop the West Qurna-1 oil field, a senior Iraqi oil official said.
The Exxon-Shell team beat two rival consortia to win the license, one led by Russia's OAO Lukoil Holdings (LKOH.RS), the other led by China National Petroleum Corp., or CNPC.
The initial agreement signed Thursday will be sent to the Iraqi Council of Ministers for approval before being finalized, Abdul Mahdy al-Ameedi, deputy head of the oil ministry's Petroleum Contracts and Licensing Directorate told Dow Jones Newswires.
West Qurna-1, with estimated proven oil reserves of 8.6 billion barrels, was one of eight oil and gas fields that was put up for auction in June this year. At the time, only one license was awarded. That was for Rumaila, Iraq's largest producing oil field.
Exxon Mobil and Shell would take production from the field up to 2.325 million barrels a day after six years of development from the current 260,000 barrels a day.
The field deal is the third signed this week after several international oil companies accepted the payment fee for each extra barrel produced set by Iraqi oil ministry to develop eight oil and gas fields listed in its first outstanding postwar bidding round.
A group made of BP PLC (BP) and China National Petroleum Corp., signed Tuesday a final $15 billion deal to develop the Rumaila field. Monday, an Italian-led group signed an initial deal with the ministry to develop the giant Zubair oil field in southern Iraq.
Iraq's Oil Minister Hussein al-Shahristani has said development of the three fields will increase Iraq's crude oil production to 6 million barrels a day from current 2.45 million barrels a day within six years.
Iraq holds the world's third largest oil reserves, but decades of war, sanctions and lack of investment have prevented the country from developing its dilapidated oil industry.
-By Hassan Hafidh, Dow Jones Newswires; + 962 799 831 831; hassan.hafidh@dowjones.com