LONDON: ExxonMobil wants to leave its flagship Iraqi oil project after upsetting Baghdad by signing a deal last year with the autonomous northern Kurdish region, which the central government deemed illegal.
The US major was the first company to flex its muscles and challenge Baghdad's authority by signing up for six blocks to explore for oil with the Kurdistan Regional Government (KRG) in October last year.
Concerns over the likely profit margins on the estimated $50 billion West-Qurna-1 project could force Exxon to abandon its stake in this southern oil field, diplomatic sources said yesterday.
"Exxon is telling Baghdad: 'We are letting you know we're looking to leave,'" one of the diplomats said. "They are shopping around and looking at all the options."
Exxon stock barely budged on the news, indicating there may be more at stake for Iraq, Kurdistan and regional politics than for Exxon shareholders.
The oil contracts row is part of a broader battle between the Baghdad government and Kurdistan over oil rights, territory and regional autonomy, which is straining Iraq's uneasy federal union.
And Baghdad has been threatening to rip up the West Qurna-1 contract ever since.
The oil row is just the latest complication in a long-running and deep-ranging dispute between Iraq's Prime Minister Nuri Al-Maliki in Baghdad and Kurdistan's President Masoud Barzani based in its capital, Arbil.
Al-Maliki has gone as far as asking US President Barack Obama to force Exxon to pull out of the deal, claiming the firm's actions are a threat to peace.
Iraqi Deputy Prime Minister Hussain Al-Shahristani met ExxonMobil executives in Baghdad in the summer and threatened to kick the company out.
He declined to say yesterday whether Exxon was pulling out, but told Reuters in an email that Baghdad was sticking to its line that all contracts signed with the KRG without the approval of Baghdad were illegal.
"All companies that entered in such contracts were asked to cancel them or pull out," Al-Shahristani said. "ExxonMobil can be contacted about their decision."
Iraqi oil sources said Exxon has not informed Baghdad of its interest in exiting West Qurna.
Exxon declined to comment, as did the US State Department.
Despite Baghdad's tough talk, Exxon chief Rex Tillerson said in March the company was committed to expanding output at West Qurna, where it's in charge, as well as exploring in Kurdistan.
And it's been business-as-usual for Exxon at West Qurna-1, now pumping more than 400,000 barrels a day and earning a hefty chunk of Iraq's central government revenue.
Exxon, with minority partner Royal Dutch Shell, signed up for the project - which targets output of 2.825 million barrels per day by 2017 - in early 2010. By the end of last year, the pair had spent just under $1 billion.
But the pace of expansion has been slow. Exxon, like other foreign operators, has complained that infrastructure bottlenecks, payment delays and bureaucratic red tape are hampering progress.
It was that frustration, say oil executives, that led Exxon to make its bold move into Kurdistan, which offers more lucrative production sharing contracts and a safer operating environment.
A further setback came in February, when Exxon was stripped of its role as project leader for a multi-billion-dollar water injection scheme that is core to the development of Iraq's southern oil fields.
"That really pushed back the time line on development," said an industry source. "In their minds, that played with the profitability of the contract."
Exxon's departure from southern Iraq now hinges on its ability to find a company willing to buy out its stake in West Qurna-1, say industry sources.
"If they can find the right buyer, they will pull out," said an industry executive. "It's an unusual move for Exxon. They usually don't give up."
Exxon is meanwhile raising its profile in Kurdistan, with drilling set to begin in a few months. A senior Exxon delegation was last week in Arbil, where the company is setting up an office, they said.
Other majors such as Chevron, Total and Gazprom have joined Exxon with their own deals in Kurdistan, provoking warnings from Baghdad.
Exxon seeks to quit flagship Iraq oil project
Exxon seeks to quit flagship Iraq oil project
How lifestyle-led real estate is reshaping Saudi Arabia’s urban future
- Government spending, regulatory changes, and incentives for foreign investors are fueling development
RIYADH: Saudi Arabia’s real estate sector is entering a new phase, one defined by lifestyle, experience, and quality of life rather than sheer housing volume.
Driven by Vision 2030, lifestyle-focused developments are set to outperform traditional residential projects, reshaping how people live, work, and connect across the Kingdom.
Government spending, regulatory changes, and incentives for foreign investors are also fueling development. Rising demand across residential, commercial, and logistics sectors, along with the push for smart cities and sustainability, is reshaping the market.
Saudi Arabia’s real estate market was valued at $77.2 billion in 2025 and is projected to grow to $137.8 billion by 2034, with a compound annual growth rate of 6.7 percent from 2026 to 2034, according to IMARC Group.
Lifestyle-focused real estate market
Saudi Arabia’s real estate landscape has evolved beyond conventional housing. Guided by Vision 2030, it now plays a key role in enhancing quality of life, boosting tourism, and driving economic diversification.
According to Sally Menassa, partner at Arthur D. Little, what stands out today is a clear shift from volume-driven residential supply to lifestyle-led, experience-based development.
“As a result, the lifestyle-focused segment is expected to outperform conventional residential real estate, growing at around 8 percent annually over the next five years. This growth is being driven by changing consumer expectations, population growth, rising incomes, and the scale of public investment shaping new urban environments,” Menassa said.
She added that demand in the Kingdom’s real estate is rising across four key segments: mixed-use districts near urban hubs such as King Salman Park; wellness-focused communities prioritizing walkability and services; coastal living along the Red Sea with branded residences; and heritage-driven districts like Diriyah and Al Balad that blend culture, hospitality, and long-term value.
“Overall, this marks a fundamental shift in the Kingdom. Real estate is no longer an end in itself and about delivering buildings; it is becoming a platform for place-making, economic diversification, and sustained value creation,” the ADL partner explained.
From another perspective, Houssem Jemili, senior partner at Bain and Co. Middle East said: “Saudi’s real estate market is forecast at roughly 7–8 percent CAGR to 2030; ‘lifestyle’ demand is being pulled most by amenity-led mixed-use communities plus higher-spec, greener and wellness-leaning homes.”
A report from PwC Middle East released in 2025 focused on the future of sustainable real estate in Saudi Arabia, and showed that the sector is shifting toward livability-focused, high-quality urban developments. Giga-projects are driving demand for mixed-use, wellness-focused, and socially connected communities that enhance quality of life.
Imad Shahrouri, cities sector lead partner, consulting, in Riyadh at PwC Middle East said: “By placing livability and human experience at the foundation of its urban agenda, Saudi Arabia is shaping a market where lifestyle-led developments will play an increasingly influential role in driving demand and investment.”
Core lifestyle elements developers are prioritizing
Saudi developers are shifting from the traditional “build and sell” model to creating integrated lifestyle communities focused on long-term value and everyday living.
Menassa from ADL highlighted that the shift centers on enhancing public spaces — with walkable areas, parks, and wellness facilities — to promote healthier, more social lifestyles, especially for a younger, health-focused population.
“Convenience is also playing a bigger role in shaping residential districts. Schools, childcare centers, clinics, co-working spaces and a wide range of food and beverage options are increasingly located within walking distance of homes, reducing commuting time and making everyday life more efficient and connected,” she said.
The partner added: “Equally important is the role of culture and social activity. Many developments now incorporate cultural venues, entertainment spaces and destination dining, ensuring that neighborhoods remain active throughout the day and week rather than becoming dormant outside working hours.”
Menassa went on to stress that real estate in Saudi Arabia is evolving into a strategic tool for quality of life, tourism, and talent attraction. Driven by Vision 2030, developments now integrate smart infrastructure and global lifestyle standards, while staying rooted in local culture to meet the needs of a young, urban population.
FASTFACT
Driven by Vision 2030, lifestyle-focused developments are set to outperform traditional residential projects, reshaping how people live, work, and connect across the Kingdom.
From Bain’s lens, Jemili said: “Developers are prioritizing livable neighborhoods. Walkability, parks and sport, culture and entertainment access, and everyday convenience, shaped by Vision 2030’s Quality of Life agenda and the 70 percent homeownership-by-2030 push.”
Shahrouri from PwC shed light on how developers in the Kingdom prioritizing livability, wellbeing, and inclusive, community-focused spaces are, aligning with Vision 2030’s push to enhance daily life and promote social integration while reflecting local identity.
“As a result, lifestyle-led elements such as walkable neighborhoods, activated public spaces and integrated community facilities are becoming central to new destinations, ensuring future developments foster more connected, resilient and experience-rich ways of living,” he said.
Regions, cities key hubs for experiential development
Several Saudi cities are emerging as prominent centers for lifestyle-focused, experiential development, each defined by its unique urban and economic character.
From ADL’s perspective, Riyadh is leading this shift as it positions itself as a global capital. The city is seeing strong demand for integrated, mixed-use districts that support live-work-play lifestyles.
“Developments such as KAFD, Diriyah, and areas surrounding King Salman Park reflect a growing preference for urban living that combines employment, culture, green space, and entertainment in close proximity,” Menassa said.
“Jeddah’s appeal is different, but equally compelling. Its strength lies in its coastal character, historic fabric, and more relaxed urban rhythm. Waterfront regeneration and heritage-led districts, particularly around Al Balad, are driving interest in developments that blend walkability, culture, and sea-facing lifestyles — attracting residents, investors, and tourists alike,” she added.
The partner continued to underline that destination developments along the Red Sea coast focus on sustainable, low-density communities blending hospitality, nature, and residential living, promoting wellness and eco-tourism.
Menassa noted that secondary cities like Abha and AlUla are emerging as hubs for outdoor living, culture, and heritage, supported by government policies and investments.
These lifestyle-driven districts appeal to residents for livability and job access, and to investors for scale and stability, offering resilience through everyday services and cultural experiences.
From Bain’s side, Jemili explained that Riyadh and Jeddah stand out as the main hubs because they combine jobs, population growth, liquidity and are where “integrated community” formats scale fastest.
“We’re seeing the same in Makkah and Madinah; the focus is shifting from delivering more units to delivering higher-quality development and standards,” he said.
From PwC’s perspective, Shahrouri noted that regions across Saudi Arabia are becoming hubs for lifestyle-driven development, with large-scale regeneration creating sustainable, well-designed environments that enhance urban living and attract global investment.
“Flagship projects are reshaping their surroundings by focusing on the character and feel of place, bringing together community elements, environmental responsibility, and integrated urban design.”
Their growing appeal comes from the balance they strike between modern infrastructure and a human-centered approach to planning, creating destinations where daily life feels more seamless and connected,” he said.
Next phase of Saudi real estate evolution
The next phase of Saudi Arabia’s real estate evolution is likely to be defined by integration, intelligence, and regeneration.
From ADL’s lens, Menassa explained that Riyadh is set to feature highly vertical, dense urban environments designed for land efficiency and sustainability, with fully integrated live-work-play ecosystems that reduce commuting, boost productivity, and enhance social cohesion.
“The real shift, however, is toward AI-enabled and data-driven communities, where energy, mobility, and services are actively managed rather than passively consumed. Real estate will increasingly be judged not by how much is sold, but by how well places perform — in terms of livability, productivity, and environmental outcomes,” she said.
The partner noted that Saudi Arabia is boosting private sector involvement, public-private partnerships, and institutional investments to develop public spaces and social infrastructure. The focus is shifting from just constructing cities to designing lifestyles, using real estate as a key driver for economic growth and social transformation.
Jemili from Bain said: “The next phase is more about operating districts like platforms, digital twins, and real-time data to optimize energy, maintenance, mobility, and resident experience, creating tighter live-work-play loops. Rather than ‘building more.’”
From PwC’s side, Saudi Arabia is building a strong foundation for future cities by focusing on resilient, resource-efficient developments and adaptable infrastructure, paving the way for smart, connected urban models like vertical districts and digital neighborhoods.
“These emerging environments are set to respond more naturally to the needs of their communities. As the quality and experience of urban life continue to rise, our cities are poised to become more intelligent, enriching and future ready, evolving with their residents and reflecting the ambition of a nation transforming at pace,” Shahrouri concluded.
