BASRA, Iraq - Iraq has signed a settlement agreement with U.S. energy giant Exxon Mobil Corp to finalise its exit from the West Qurna 1 oilfield and allow PetroChina to become the field's lead contractor, a senior Iraqi oil executive said on Saturday.

"We studied the settlement agreement and the oil ministry with the Basra Oil Company believe that the best option is for Petrochina to become the lead contractor of West Qurna 1," Hassan Mohammed, deputy Basra Oil Co. manager in charge of oilfields and licensing rounds affairs, told Reuters.

PetroChina will hold the largest stake in the field after the departure of Exxon.

Iraq has also signed a "sale agreement" arranging the financial issues to finalise the process of acquiring Exxon Mobil Corp's (XOM.N) stake in West Qurna 1 oilfield by Iraq's state-run Basra Oil Co. (BOC), said Mohammed.

The sale agreement includes a commitment to resolve in further talks the tax value that Exxon must pay for selling its stake in the field, he said.

"Tax issue is not resolved yet and according to the sale agreement we have two options, either to reach a tax settlement or we resort to arbitration," said the BOC executive.

Exxon and PetroChina were not immediately available for comment, but two oil managers at the West Qurna 1 field confirmed the details of the settlement and sale agreement signed with Exxon.

Last year, Indonesia’s state-owned oil and gas firm Pertamina bought 10% of Exxon Mobil’s stake in Iraq’s West Qurna 1 oilfield, increasing its share to 20%, while BOC bought 22.7% of the field.

Basra Oil Company director Khalid Hamza told Reuters in an interview in 2021 that Exxon was seeking to sell the share for $350 million.

West Qurna 1, in southern Iraq, is one of the world’s largest oilfields with recoverable reserves estimated at more than 20 billion barrels. It currently produces around 560,000 barrels per day, said the field officials.

Following its exit from West Qurna 1, Exxon will have no presence in Iraq's energy sectory, said BOC officials.

(Reporting by Aref Mohammed in Basra; Additional reporting by Hadeel Al Sayegh in Dubai; Writing by Ahmed Rasheed; Editing by Kirsten Donovan and Giles Elgood)