Are These Western Oil Majors Operating in Iraq at Serious Risk?

For Western oil majors ExxonMobil, BP, Shell, and Chevron, Iraq represents only a minimal share of production and earnings.

Jun 25, 2014 at 2:00PM

As violence in Iraq continues to rage, many are growing increasingly concerned about the potential impact on Western oil majors operating in the country.

While Iraqi oil production, which is concentrated mainly in the south and in the semiautonomous region of Kurdistan, has been unaffected so far, a longer-term deterioration in the nation's security situation could prompt a number of Western companies to scale back operations.

ExxonMobil (NYSE:XOM) and BP (NYSE:BP) have already evacuated some expatriate staff and nonessential personnel from Iraq, while Royal Dutch Shell (NYSE:RDS-A) said it plans to do the same if the security situation worsens.

With that said, let's take a closer look at some of the main Western oil majors with operations in Iraq and how much they have at stake amid the sectarian fighting.


Tankers at the Al Başrah Oil Terminal, a key Iraqi crude oil loading terminal in the Persian Gulf. Photo credit: Wikimedia Commons.

ExxonMobil and BP
Exxon held 0.9 million net onshore acres in Iraq as of year-end 2013. The bulk of the company's operations are focused on the West Qurna oil field, where it completed 23.2 net development wells last year. It also has interests in the Kurdistan Region of Iraq, where it initiated a seismic program and exploration drilling activity last year.

BP's presence in Iraq includes its 38% working interest in the Rumaila field -- one of the world's largest oil fields, which was discovered by a BP-led consortium in 1953 -- where it serves as the lead contractor in the Rumaila technical service contract. Rumaila contributed 39,000 barrels per day of production net to BP last year.

Shell and Chevron
Shell's presence in Iraq is mainly through its 45% interest in the massive Majnoon oil field in southern Iraq. Production from Majnoon, which Shell operates alongside partners Petronas (30%) and the Iraqi government (25%), reached 175,000 barrels per day last year. Shell also has a 15% stake in the West Qurna 1 field.

Shell also has a 44% stake in Basrah Gas, a joint venture with South Gas (51%) and Mitsubishi (5%) that commenced operations last year. Basrah gathers, treats, and processes gas produced from the Rumaila, West Qurna 1, and Zubair fields and sells it mainly to the domestic market.

Lastly, Chevron (NYSE:CVX) maintains an 80% interest in two production sharing contracts covering the Rovi and Sarta blocks in the Kurdistan Region of Iraq. The company commenced exploration drilling in these two blocks in the second half of last year and plans to continue the effort this year. Chevron also acquired an 80% stake in the Qara Dagh block in Kurdistan in June 2013.

Minimal impact to business
Overall, Iraq represents a relatively insignificant share of production for Shell, BP, and Exxon, while Chevron currently doesn't have any producing properties in the country. According to estimates by investment research firm Morningstar, Iraq represented just 1.8% of Exxon's 2013 production, 1.9% of BP's, and 0.7% of Shell's.

Furthermore, as Morningstar noted, the earnings contribution from production is likely even smaller since these companies operate under service contracts with the Iraqi Ministry of Oil that greatly limit their profitability. They "only receive a modest remuneration fee of a few dollars per barrel after cost recovery," which means the companies' Iraqi barrels "tend to be some of the least valuable" in their portfolios, Morningstar stated.

Investor takeaway
Iraq represents only a small fraction of these Western oil majors' production and earnings. The bigger geopolitical risk to these companies is Russia, which accounts for a much greater share of their production, reserves, and capital spending, especially in the case of BP. If the U.S. and its European allies impose additional sanctions on Russia for its actions in Ukraine, Western oil majors could be forced to put some of their new Russian projects on hold, jeopardizing their extensive investments in the country.

OPEC is absolutely terrified of this game changer

While Exxon, BP, Shell, and Chevron struggle to overcome geopolitical risks, smaller oil companies are helping radically transform America's domestic energy landscape. US oil production continues to surge as our country moves closer to energy independence. And there is one company front and center that is poised to make its investors rich. Warren Buffett has already committed to it, and you can too. Click here to learn about this company in the Motley Fool's special report: OPEC's Worst Nightmare.


The server principal "Dashboard_user" is not able to access the database "Party" under the current security context.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers