Last Friday, according to industry sources, the biggest energy company in China, PetroChina, will take part in Exxon Mobil’s project of exploitation of the giant West Qurna oilfield in Iraq. Now it is having a discussion with Lukoil with the purpose of buying into a second project at the field.

 China has become the foremost foreign player in the development of Iraq’s southern oilfield, and the deal done at Weat Qurna will enhance its advantages at the field, which can also help PetroChina become the biggest investor among single foreign investors.

PetroChina formats a partnership with BP at Rumaila, Iraq's biggest oilfield, and operates the Halfaya field. The firm was the first foreign company to be awarded an oil service deal in Iraq since US-led forces had overthrown the former president Saddam Hussein.

An industry source with direct knowledge of the deal with Exxon declared that PetroChina will be a part of the development of this field.

According to the source, the agreement would be pronounced these days, but further details on how the world's two most valuable listed energy firms would work together in Iraq remain confidential. Both PetroChina and Exxon declined to give the answer yet.

Exxon holds a 60 per cent stake in West Qurna 1, a $50 billion investment project pumping around 480,000 barrels per day (bpd).

In March, the ex-chairman of PetroChina, Jiang Jiemin, told Reuters that the Chinese energy major would be pleased to work with Exxon at West Qurna.

A Lukoil source revealed that PetroChina is also trying to persuade Lukoil for a stake in another development project at the field, West Qurna-2. That source also declined to give any further details on the size of the stake under discussion.

"Lukoil bosses have already said they would prefer an Asian partner, a Chinese partner, in the project to secure a guaranteed market for oil sales," the source said.

The Chief Executive of Lukoil, Vagit Alekperov, has revealed that the company wanted a Chinese firm to take the place of Norway's Statoil at the project. Last year, Statoil agreed to sell its 18.75 per cent stake.

China is the world's second-largest oil importer, second only to the United States, and it is increasingly growing in fuel consumption which has driven global oil demand growth for at least a decade.

Faced with falling demand for imported oil in the United States and Europe, oil producers from the Middle East, Russia, Africa and Latin America are all competing for a bigger share of China's growing market.

West Qurna-2 is expected to have a capacity of 500,000 bpd in 2014, and require total investment of $30 billion. Lukoil will invest $5 billion in the project in 2013 alone as planned.

Exxon offered last year to sell its stake in the southern Iraq West Qurna-1 oilfield after a contention with Baghdad over contracts it signed with autonomous Kurdistan in the north, and the deals that had been declined by the central government as illegal.

A source familiar with PetroChina operations in Iraq said in March the two companies were negotiating over a deal that would make Exxon maintain the operator status at the oilfield, where Royal Dutch Shell is minority partner with 15 per cent.

Some industry sources deemed that it was merely impossible for PetroChina to buy stakes in both projects, owing to the sheer size and scale of the projects.

But these oilfields in Iraq are the most giant oilfields in the Middle East open to foreign investment, and PetroChina can barely resist for the reason that China's dependency on imports is increasing.

"PetroChina is under big pressure to add output and reserves for its size," a second industry official, who is privy to the information of PetroChina's investment strategy abroad delared.

The second industry official added that with those attractive contract terms, Iraq was among the brightest spots for PetroChina's international operations over the past three years, working shoulder by shoulder with global oil giant companies.

Commented by industry officials as a tight gas play, Exxon and PetroChina have reached a consensus in a separate deal in late July to jointly study the 3,830 sqare-kilometre Changdong block in northern China's Ordos basin.

As an Exxon media official in Beijing said in an email on Thursday, Exxon Mobil is anticipating a successful implementation of the JSA, which would lead to discussion and execution of a Production Sharing Contract for the block.

Exxon joins Shell and Total, and has already developed tight gas in the Ordos basin.

It is the second joint study deal US firm worked with PetroChina. The companies had once agreed to research a shale block in southwestern China's Sichuan province.

(Edited by Jeasin)