UPDATE 2-Iraq would favour CNPC, Lukoil bids for Exxon oil stake

* Iraq says received "positive signals" from CNPC, Lukoil

* Exxon opens virtual data room for West Qurna 1 oilfield

* Company invites bids by Dec. 5

BAGHDAD, Nov 16 (Reuters) - Iraq would favour bids by

Russia's Lukoil and China's CNPC if they decided to

buy Exxon Mobil's stake in the super-giant West Qurna-1

oilfield, a senior oil ministry official said on Friday.

A sale of the stake to either company would significantly

strengthen the position of Russia or China in exploiting Iraq's

oil reserves, the world's fourth biggest.

"During two separate meetings with executives from CNPC and

Lukoil, Iraq informed the companies that it favours their

contribution to purchase Exxon's share in West Qurna-1

oilfield," the official told Reuters.

Baghdad said it had received "positive signals" from both

companies that they will consider making an offer for the $50

billion project, which Exxon wants to pull out of to focus on

its deal for exploration blocks in Iraq's autonomous Kurdish

region.

Exxon riled Baghdad by signing deals last year with the

Kurdistan regional government (KRG). Baghdad rejects contracts

granted by the KRG as illegal and told Exxon it had to choose

between working in southern Iraq or Kurdistan in the north.

The U.S. oil major opted to stick with Kurdistan, where the

contracts are seen as more lucrative.

"We have received positive signals from both CNPC and Lukoil

that they will consider purchasing Exxon's stake in West

Qurna-1," said the official on condition of anonymity.

"Iraq believes that both companies have enough financial

resources and the technology to manage the giant oilfield

instead of Exxon Mobil," he added.

DATA ROOM OPENED

Exxon has now opened a virtual data room for West Qurna-1

and approached all likely buyers, inviting bids by Dec. 5, two

sources said.

Lukoil, Russia's second-largest crude producer which is

already developing West Qurna-2, had previously said West

Qurna-1 was "too big for it to swallow", but last week said it

was looking into the option.

That has prompted some speculation it could team up with

another company, possibly CNPC, to develop the field.

A spokesman for Lukoil confirmed the company had received an

offer to develop West Qurna 1: "We are studying it," he said,

declining to comment on whether a joint venture was on the

cards.

Lukoil is trying to offset a production decline at its

fields in Russia, where it faces competition from state-backed

companies, by acquiring foreign upstream assets.

The company is active in the Middle East, Central Asia, West

Africa and Latin America. But Russia's vast Arctic offshore

reserves are off-limits for Lukoil due to legal restrictions

that limit participation to state-controlled companies.

Two CNPC sources said the company was aware of Exxon's plan

to pull out of the West Qurna 1 project, but declined to confirm

or deny reports it was thinking of moving into the field.

In general, they said, CNPC is interested in expanding its

operations in Iraq and will not entertain any projects in the

Kurdish region so as not to jeopardise its existing deals with

the federal government.

A spokesman of the state-owned China National Petroleum

Corp. declined to comment on its plans.

Earlier this week, Iraq's deputy prime minister for energy,

Hussein al-Shahristani, said the government was in advanced

talks with potential buyers to take on West Qurna and that there

were enough appropriate candidates.

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