Senior visiting fellow, George Mason University
ExxonMobil’s return to southern Iraq this month underscores how far Baghdad has surged ahead of Tehran in exploiting their shared border oilfields—and how the two neighbors’ fortunes are diverging.
The deal with Basra Oil Company and the State Oil Marketing Organization, announced last week, aims to revive production at Majnoon, which is part of the same geological structure as Iran’s Azadegan field.
ExxonMobil plans to invest $5-10 billion to boost Majnoon’s output by 240,000 barrels a day over five years, helping Iraq hit its target of seven million barrels per day by 2030.
The American supermajor had left the Iraqi space when it exited another oil field due to what it described as challenging contract terms.
Across the border, decades of sanctions, underinvestment, and weak governance have crippled Iran’s ability to tap the same reservoirs including Azadegan, Yadavaran and West Karun, leaving output far below capacity.
Iraq’s comeback
Iraq’s resurgence is best illustrated by Majnoon, Artawi and Dehloran.
Majnoon, discovered in 1975 but dormant for decades, now produces more than five percent of Iraq’s total output. Artawi doubled production last year and is on course to do so again this year.
Together, these fields have added roughly 300,000 barrels a day since 2010, far outpacing Iran’s performance on the same geology.
The October ExxonMobil deal builds on this momentum, introducing advanced processing infrastructure and a profit-sharing model designed to sustain growth.
Iran’s stagnation
Iran, despite holding the world’s fourth-largest proven oil reserves, produces only about 200,000 barrels a day from the West Karun cluster—less than comparable Iraqi fields.
Modest gains at South Azadegan and Yaran this year have done little to close the gap.
Experts estimate Iran needs $11 billion to fully develop its five joint fields, but sanctions have deterred most international investors.
Sporadic involvement by Chinese and Russian firms has yielded little progress, while the absence of a bilateral framework for cross-border field management risks reservoir damage from unilateral drilling.
Iran’s National Iranian Oil Company still relies on old-style contracts offering low returns of 15-20 percent, compared with Iraq’s 20-30 percent technical service terms that attract global players.
As a result, Iran’s shared fields operate at barely a quarter of their potential.
Recent government plans to raise West Karun output to 550,000 barrels a day by 2033 are widely seen as unrealistic without sanctions relief and major reforms.
Meanwhile, a shadow trade rebranding Iranian oil as Iraqi through ship-to-ship transfers keeps exports near 1.5 million barrels a day but undermines transparency and investor confidence.
Shifting Power Balance
The contrast between Basra’s humming rigs and Ahvaz’s stalled projects reflects more than technical capacity — it marks a shift in regional power. Iraq’s energy sovereignty is strengthening through foreign partnerships and phased development, while Tehran’s stagnation erodes both revenue and influence.
Iraq’s experience shows how targeted investment and competent management can turn contested resources into engines of growth. For Iran, isolation and rigid policies have turned the same geology into a symbol of lost opportunity.
