Iraq Deputy Prime Minister Blasts 'Threats' Against Exxon

Iraq's Deputy Prime Minister for Economic Affairs Rosh Nori Shawis, who represents the Kurdish Alliance block in the central government in Baghdad, Wednesday blasted as "threats to international oil companies" statement made recently by a government spokesman in Baghdad concerning ExxonMobil Corp. contracts in the country's Kurdistan region.

"These statements, particularly those which threaten international oil companies and warn them from working in (Iraq's) Kurdistan, would make them quit working in all of Iraq," Shawis said in a statement emailed to Dow Jones Newswires.

Faisal Abdullah, a spokesman for Deputy Prime Minister for Energy Affairs Hussein al-Shahristani, said Feb. 13 that Iraq would ban ExxonMobil from bidding in the country's fourth oil and gas licensing auction because of the deals it struck with the country's semi-autonomous Kurdistan region.

"These statements also communicate a negative picture to all investors in all aspects, and run contrary to the state's open economic and trade policy as well as encouraging investment in all fields," Shawis said.

Iraq is planning to auction 12 promising exploration blocks, seven of which are believed to contain natural gas, and five thought to contain crude. The new bid round, expected to add some 10 billion barrels of crude oil and some 29 trillion cubic feet of gas to Iraq's reserves, has already been delayed twice amid arguments on whether the contracts offered should be of the production-sharing type wanted by the explorers, or the fixed-fee service contracts wanted by the government.

Al-Shahristani has previously said Exxon would have to choose between its deal to explore six areas in Kurdistan and its central-government contract to develop the 370,000 barrels a day West Qurna Phase 1, Iraq's second-biggest field with proven reserves of more than 8.7 billion barrels.

In December, Iraq's Prime Minister Nouri al-Maliki met with senior Exxon executives during a visit to the U.S., and said afterward that the Irving, Texas-based company had promised to reconsider its dealings with the Kurdistan Regional Government.

The KRG has signed nearly 50 oil-and-gas deals with international oil companies, mostly second-tier or wildcat explorers. The KRG was hopeful that Exxon's presence would ease the passage of other majors, such as Total SA, which is active in Iraq.

Some of the blocks in the Exxon-KRG deal are in a hotly contested oil-rich territory claimed by both the central government and the KRG, stretching from the Iranian border to the east and to the Syrian border in the northwest.

Baghdad has already blacklisted companies that maintain deals with the Kurds, excluding them from working elsewhere in Iraq. Among those is New York-based Hess Corp., which was barred last year from competing in the fourth energy auction.

However, Adnan Al Janabi, chairman of the Oil and Energy Committee in the Iraqi Council of Representatives, last week told Dow Jones Newswires that the Oil Ministry doesn't have the legal authority to blacklist Exxon over its Kurdistan contracts.

Copyright (c) 2012 Dow Jones & Company, Inc.


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Umit Bayulken | Feb. 15, 2012
It is known in the legal world that IRAQ is one country. Iraq is sovereign within all internationally recognized territory of itself and the sovereign capital and government is in Baghdad. Therefore a foreign company cannot make deals with semi-autonomous regions of that particular state. Would Russian federation (Kremlin) allow any company cutting a deal with TATARISTAN, or KOMI Republic without their prior consent or approval? Think about it ... It is so dangerous to get in to this type deals. Our master minds(lawyers) must understand that US or Western norms do not work in other sovereign nations. I am afraid this type of business approach will play into the hands of companies like CNPC, SINOPEC, Petronas Carigali, is a shame really, Exxon Mobil should have gone through Baghdad instead of Erbil.

john | Feb. 15, 2012
Keystone looks better and better

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