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Iraqi Kurdistan confirms Exxon oil deal-minister

14 November 2011 10:23 (UTC +04:00)

Natural Resources Minister Ashti Hawrami said the Kurdistan Regional Government (KRG) signed a contract with Exxon in mid-October for six exploration blocks in the semi-autonomous region.

Iraq’s central government, which has long-running disputes with the Kurdish region over oil and land, has said Baghdad would consider a deal between Exxon and the KRG illegal and a violation of the company’s contract to develop Iraq’s 8.7-billion-barrel West Qurna Phase One oilfield in the south.

It was the first official confirmation from the KRG. Exxon has yet to comment on the deal.

Iraqi Kurdistan has enjoyed more stability and security in recent years than the rest of Iraq, which is struggling with stubborn violence from insurgents and militias more than eight years after the U.S. invasion that toppled Saddam Hussein.

The KRG has signed contracts with a number of smaller foreign firms to develop oilfields in the region, but the contract with Exxon would be its first with a global oil major.

Baghdad disputes the validity of the contracts, saying it has the right to control development of the world’s fourth largest oil reserves.

Abdul-Mahdy al-Ameedi, the director of the Iraqi oil ministry’s contracts and licensing directorate, said on Friday the government had sent three letters to Exxon Mobil warning that any deal with the KRG would be considered illegal.

Ameedi said such a deal could result in the termination of Exxon’s contract to develop West Qurna Phase One field, a deal Exxon and partner Royal Dutch Shell clinched in 2009.

In June, Deputy Prime Minister Hussain al-Shahristani said West Qurna Phase One production had hit 350,000 barrels per day and was expected to reach 400,000 bpd by year-end.

A statement on Exxon from Shahristani’s office on Saturday said Iraq would deal with any company that violates its laws "in the same way that we dealt with similar companies previously".

Iraq announced in September that it would bar U.S. oil firm Hess Corp from competing in its fourth energy auction, scheduled for next year, because the company signed deals with the Kurdish region.