Norwegian oil major Statoil ASA (STO) has increased its ownership stake in the Iraqi super giant West Qurna Phase 2 oil field by entering into an agreement with Russia’s Lukoil Holdings. Following the agreement, Statoil’s share rose to 25% from 15%, while Lukoil’s stake reduced to 75% from 85%.

Located in the Basra Governorate, nearly 65 kilometers northwest of the city of Basra in southern Iraq, the huge West Qurna Phase 2 oil field holds approximately 12.8 billion barrels of proven crude oil reserves.

During the second week of this month, both the companies secured the winning bid for this field and agreed with a production plateau of 1.8 million barrels per day and a remuneration fee of $1.15 per barrel. However, this adjustment in ownership will not entail any compensation.

While Statoil is quite active in the Norwegian Continental Shelf region, the company is looking for the development of various international assets. The stake increase in Iraqi field and intention to start production at the Peregrino heavy oil field in Brazil are a few cases in point.

Production growth from international operations is a key component of the company’s overall annual upstream growth plans over the next few years. A sharp rise in production and the company’s improving of normalized returns on capital employed (ROCE) by maintaining disciplined capital outlays and reducing operating costs remain the chief reasons behind our long term bullish view for the stock.

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