OREANDA-NEWS. August 21, 2013. PetroChina, China’s largest energy company, was the first foreign firm to sign oil deals with Baghdad after the US-led invasion to topple Saddam Hussein, and has grown to be the largest foreign major working in Iraq’s oilfields.

It already works as a partner to BP at the Rumaila fields, and holds operations in the Halfaya and al-Ahdab fields, but is now forming a deal to join Exxon Mobil to develop the giant West Qurna 1 field, and potentially buy into a Lukoil project at West Qurna 2; two investments that would make PetroChina the largest foreign investor in Iraqi oil.

A source with intimate knowledge of the deal between the two largest listed energy companies in the world, told Reuters that the agreement between PetroChina and Exxon will be announced in weeks, but refused to offer more details.

The West Qurna field has the potential to produce more than 5 million barrels a day, enough to rival the Ghawar field in Saudi Arabia, the world’s largest producing field. In 2009 Baghdad signed a series of contracts with international oil majors in order to boost Iraq’s output to 12 million barrels a day by 2017, enough to make it the largest producing country in the world. Subsequent problems with security and infrastructure have forced that target to be reduced to 9 million barrels a day by 2020, but the West Qurna field still plays a prominent role in achieving that goal.

Exxon holds a 60% stake in the West Qurna 1 field, and along with its minority partner Royal Dutch Shell, has continued to make progress in the USD50 billion project. Currently the field produces around 480,000 barrels a day.

Another source told Reuters about a potential deal between PetroChina and Lukoil, the Russian energy company. Last year Statoil, Lukoil’s partner in the West Qurna 2 field, announced that it wanted to sell its 18.75% stake in the project, and Lukoil’s Chief Executive Oifficer, Vagt Alekperov, said that his company would prefer to secure a Chinese firm as their new partner.

The West Qurna 2 field is expected to begin producing this year, with a target output of 500,000 barrels a day in 2014. The project needs an estimated USD 30 billion investment.

Some industry experts believe that PetroChina will not invest in both projects due to the size of each of them, but Iraq offers the best investment in the world at the moment, especially for a nation keen to secure reserves as its demand continues to grow.