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China's largest oil and gas producer – PetroChina – is interested in joining Texas-based ExxonMobil Corporation (XOM - Analyst Report), for the development of West Qurna oilfield in southern Iraq. Both parties are yet to finalize on the size of stakes to be shared.

ExxonMobil was mulling over withdrawing from the $50 billion West Qurna 1 oilfield project after it signed for six blocks with the autonomous Kurdistan regional government. However, the Iraqi government was forcing the company to continue with the project.

Located in the south of Iraq, near the city of Basra, the West Qurna oil field has estimated reserves of 8.7 billion barrels. Earlier, in 2010, ExxonMobil and its minority partner Royal Dutch Shell Plc (RDS.A - Analyst Report) signed an agreement for the project with a targeted output of 2.825 million barrels per day by 2017.

PetroChina’s interest to jointly develop the field with ExxonMobil was appreciated by the latter and the Chinese major also got the Iraqi government’s support. PetroChina is likely to perform a project appraisal in a comprehensive manner and make an investment decision at the right time.

Though the project has a substantial asset value, it does not require massive capital spending in the near term.

PetroChina represents the first foreign oil company to ink an oil service deal in Iraq after the collapse of its former president Saddam Hussein. It is also investing in several giant oil projects such as Halfaya and Rumaila.

ExxonMobil has diverse operations across the world with several new projects expected to come online through 2013. While Exxon functions in all corners of the globe, the main areas of focus for the coming years include the U.S., Canada, Kazakhstan, West Africa, Australia, Russia, Angola and Iraq for new volumes.

ExxonMobil holds a Zacks Rank #3, which is equivalent to a short-term Hold rating. However, there are other stocks in the oil and gas sector – Enerplus Corporation (ERF - Snapshot Report) and Range Resources Corporation (RRC - Analyst Report) – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.

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