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Abu Dhabi, UAEFriday 14 December 2018

Shell sells stake in southern Iraq oil field for $406 million to Itochu subsidiary

Deal includes purchaser agreeing to take on debt of $144 million

Shell sells West Qurna 1 to Itochu for $406 million. REUTERS/Marcos Brindicci
Shell sells West Qurna 1 to Itochu for $406 million. REUTERS/Marcos Brindicci

Shell agreed to sell its 19.6 per cent stake in the West Qurna 1 oil field in southern Iraq for $406 million to a subsidiary of Japan’s Itochu Corporation, as the energy major undergoes a $30 billion divestment programme to streamline its upstream portfolio.

The purchaser assumes debt of $144 million as part of the transaction, the company said in a statement. The sale, which is expected to be completed in the next couple of days, has an effective date of December 2015.

“Iraq is an important country for the Shell Group and exiting West Qurna 1 allows us to focus our resources on other assets in our Iraq portfolio,” said Andy Brown, Shell’s Upstream Director.

“Shell remains committed to working with its partners to redevelop Iraq’s energy infrastructure by capturing associated gas, through the Basrah Gas Company joint venture for domestic and regional consumption.”

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Shell joined the project, which will continue to be operated by ExxonMobil, in 2009. The company said its other businesses in Iraq would not be affected by the sale.

Oil exports from southern Iraq have fallen by 70,000 barrels per day (bpd) this month, Reuters reported on Friday, citing shipping data and an industry source, suggesting Opec’s second-largest producer is heading for a third month of lower shipments.

Southern Iraqi exports in the first 21 days of March averaged about 3.36 million bpd, compared to 3.43 million bpd in February, shipping data followed by Reuters and independent tracking by an industry source showed.

Iraq had been boosting exports from its southern terminals, which handle the bulk of such trade, to offset a halt in shipments from its northern Kirkuk oilfields in October after Iraqi forces seized control of fields from Kurdish fighters.

Northern exports have averaged 270,000 bpd so far in March, compared with an estimated 340,000 bpd in February, according to shipping data and the industry source. That is far below levels of more than 500,000 bpd in some months of 2017.