Core Insights - ExxonMobil's recent signing of a heads of agreement with Iraq's Oil Ministry marks a significant return of Western firms to Iraq, following its high-profile exit due to trust issues and corruption concerns [2][4] - The withdrawal of ExxonMobil and other Western firms was symptomatic of broader issues in Iraq's oil sector, including corruption and governance challenges, which have hindered the country's oil potential for decades [2][4] - The new agreement indicates a potential shift in the geopolitical landscape, with the West aiming to reassert its influence in Iraq and the Middle East [2][3] Summary by Sections ExxonMobil's Withdrawal and Return - ExxonMobil's exit from Iraq involved critical projects like the Common Seawater Supply Project (CSSP) and the West Qurna 1 oil field, driven by a breakdown in trust over risk/reward balance and corruption practices [1][2] - The recent agreement suggests that ExxonMobil has received assurances regarding cohesion, security, and streamlined processes from Iraq's government, which are crucial for its operations [2][4] Corruption and Governance Issues - Transparency International's reports highlighted Iraq's severe corruption issues, including embezzlement, procurement scams, and bureaucratic bribery, which have severely limited effective governance [2][4] - The U.S. firms are now required to have all agreements vetted by U.S. legal and accounting firms to ensure compliance and mitigate risks associated with corruption [1][2] Development of the Majnoon Oil Field - ExxonMobil's new focus will be on the Majnoon oil field, which has an estimated 38 billion barrels of oil in place and is one of Iraq's largest oil fields [5] - The field has a history of production challenges but has the potential for significant output increases, with a previous plateau production commitment of 1.8 million barrels per day [5] - The Majnoon field's development is strategically important as it is shared with Iran, potentially limiting Iranian oil exports under international sanctions [4][5]