Shell said it has agreed to sell its entire stake in the West Qurna 1 oil field for US$406 million to Japan’s Itochu Corporation.
Shell EP Middle East Holdings B.V will sell the entire share capital of the Iraq unit, which holds a 19.6 percent stake in the oilfield to a unit of Itochu, it said in a statement.
The Japanese company will also assume debt of $144 million as part of the transaction, Shell said. The sale has received the necessary regulatory consent, is expected to complete in the next few days, and has an effective date of 31 December 2015.
Shell in September 2017 agreed to exit the Majnoon oilfield, one of Iraq’s largest fields and hand over its operation to state-run Basra Oil Co (BOC) by end-June.
West Qurna is also among Iraq's largest oil fields, located north of Rumaila field, west of Basra. West Qurna is believed to hold 43 billion barrels of recoverable reserves. Shell’s other partners included ExxonMobil (32.7 per cent), PetroChina (32.7 per cent), Pertamina (10 per cent) and Oil Exploration Company (5 per cent state partner).
Since joining the project in 2009, Shell has enjoyed successful cooperation with its partners in the West Qurna 1 venture, which will continue to be operated by ExxonMobil.
Shell’s upstream director, Andy Brown, said: “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. We are grateful for the support of the Iraqi government during the divestment process.
“Shell remains committed to working with its partners to redevelop Iraq’s energy infrastructure by capturing associated gas, through the Basrah Gas Company (BGC) Joint Venture, for domestic and regional consumption.
This deal maintains the momentum behind Shell’s $30 billion divestment programme and is in line with the drive to simplify our upstream portfolio and reshape the company into a world class investment, he added.
Shell said its other businesses in the country will not be affected by this divestment.