ExxonMobil Speaks Out on Iraq's Kurdistan Negotiations

HOUSTON - Exxon Mobil Corp. confirmed it negotiated last year exploration and production contracts with Iraq's Kurdistan Regional Government.

"Exploration and production activities in the Kurdistan region of Iraq are governed by production sharing contracts negotiated with the regional government of Kurdistan in 2011," Exxon said in its 10-K filed with the Securities and Exchange Commission Friday.

The company said the exploration term is for five years with the possibility of two-year extensions, while the production period is 20 years with the right to extend for five years.

The confirmation comes after months of silence by Exxon, which had declined to comment on remarks made by the Kurdistan Regional Government, or KRG, which had said the company signed the deals.

The move has infuriated Iraq's federal government, which considers as invalid any deals signed with the KRG, which in turns states that any and all deals it has signed comply with the country's new constitution.

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.

Early this month, Iraq's federal government said Exxon Mobil will be blocked from participating in the fourth licensing round in Iraq.

Baghdad has 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.

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


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Jim | Mar. 2, 2012
Well done Exxon/Mobil and badly done Iraq. A perfect lesson on how to influence your enemies and alienate your friends.

Jay Oatmon | Mar. 2, 2012
The KRG is a much better operating environment than in the south/central parts of Iraq, from the security standpoint and it is also much more attractive commercially. Bagdhad needs to actually make some common sense decisions and to get oil exploration and production moving after years of infighting and the inability to agree on anything - if not the KRG will remain the place of choice for the oil companys to spend their dollars. It is all about power plays and enhancing positions rather than consensus and advancement.

Philippe | Feb. 28, 2012
In Iraq the corruption is such that any majors worth anything will be tainted as corrupted. XOM does not lose much. Further, the contract conditions the majors have to sign with OPEC member nations, does not leave much profits, especially that the major has to come up with the cash and the local contain and the currency exchanges. XOM has better opportunities else way, with more assured profits. Will the Chinese put up with the Iraqis conditions, Chinese are not Yankees? The losers may be the Iraqis.

Rad-Writer | Feb. 28, 2012
I think Iraq and Iran should sit down and have a pow-wow and split the wells between them snd that way both sides will become rich and no more warring. it only destroys all the oil money they could have between them.If they go to war thenc other countries will end up cleaning up on their oil as well . Stick together two heads are better than one.

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