DALLAS Oct. 3, 2007 (From The Wall Street Journal via Dow Jones Newswires)
Hunt Oil Co. Chief Executive Ray Hunt said his ties to the Bush family and the Republican Party didn't help his company cut a deal last month to explore for oil in Iraq's semiautonomous Kurdish region.
The agreement, which gives the closely held Dallas company access to a largely unexplored part of oil-rich Iraq, has been criticized by the Bush administration and Iraqi officials as undermining efforts to strengthen the war-torn country's central government. Some critics also suggested Mr. Hunt was cashing in on his ties to President Bush, while others claimed he was turning his back on the president.
In an interview, the 64-year-old Mr. Hunt says that, contrary to the State Department's assertion, the company received no U.S. government advice before striking a deal. "The State Department must have been misinformed," he said. "We did not consult with anyone in the [U.S. government] prior to signing our agreement."
Mr. Hunt, a longtime friend of the Bush family, gave $75,000 to Republican Party fund-raising committees in the past two years, according to the Center for Responsive Politics. But he said his political ties didn't play a role; the company saw an opening in Kurdistan and jumped on it. "It's another example where we're able to move quickly when opportunity presents itself," said Mr. Hunt, who says Kurdish oil executives turned to Hunt because of its oil-development record in Yemen.
Mr. Hunt added: "The fact is, as a matter of policy, we never have and never will go to the government of the U.S. and ask the government's advice on anything we do from a business point of view."
The State Department says it warned Hunt Oil against signing a contract that it viewed as "legally uncertain." In a news conference late last month, Mr. Bush said he was "concerned" the arrangement would "undermine" negotiations for a national oil law.
The Hunt Oil deal has been touted by Kurdish officials, who want to bolster their claim to autonomy in oil-related issues and worry that energy resources are more thoroughly mapped in Shiite-dominated southern Iraq. But the Hunt contract has angered the Baghdad central government, which worries about a breakup of the state.
Hunt Oil is much smaller than super majors such as Exxon Mobil Corp., BP PLC and Royal Dutch Shell PLC. But it has a reputation in the U.S. oil patch as a risk taker. As a closely held company, it feels it can move faster than larger rivals. Mr. Hunt often refers to his firm as a "commando" operation, wooing customers with its derring-do.
Under terms of the Kurdistan contract, Hunt Oil plans to start seismic testing in the next few weeks and to drill its first well sometime next year. But Mr. Hunt emphasized that the contract is for exploration only, not for production, which could take an additional few years to begin -- if the company manages to find oil.
The Kurdish regional government yesterday said it had signed a variety of additional oil deals, which could reduce the political heat on Hunt. They include exploration agreements with two midsize oil companies, Heritage Oil Corp., of Canada, and Perenco SA, of France, and separate agreements to build two oil refineries.
Qubad Talabani, the Kurdish government's representative in the U.S., credited Hunt with boosting the visibility of Kurdistan. "When a name as established as Hunt comes in, it raised eyebrows in the oil-and-gas community," he said.
Iraq is estimated to hold some 115 billion barrels of reserves, making it the third-largest holder after Saudi Arabia and Iran. But after decades of war, the country is relatively unexplored.
Friendly and reserved, Mr. Hunt lacks the family's flamboyance. His father, H.L. Hunt, was a wildcatter who fathered 15 children by three women and used poker winnings for early capital, while two of Ray Hunt's half-brothers tried to corner the world's silver market.
But Ray Hunt shares his family's thirst for business risk and penchant for secrecy. The company won't release its revenue or even the number of Hunt employees.
Mr. Hunt has expanded its business overseas, including the North Sea and Yemen. Hunt Oil is also a big investor in a natural-gas project in Peru's Amazon and is now building a liquefied-natural-gas export facility in Peru.
Hunt is used to politically precarious situations. It struck oil in northern Yemen in the early 1980s and built the operation during periodic civil wars. Yemen expropriated a big part of its holdings in 2005, which Hunt is contesting in international arbitration, though it still has interests elsewhere in the country.
Its record in Yemen helped get it a leg up in Kurdistan, said Mr. Talabani, the Kurdish official. Over the years, Hunt has also kept up contacts with Ashti Hawrami, the Kurdish oil minister.
"We consider ourselves to be loyal American citizens as individuals and as a company," Mr. Hunt said. His company won't deal with countries that are being sanctioned by the U.S., like Cuba or Iran, or look for legal loopholes that would give it a leg up there, he said.
Chip Cummins and Neil King Jr. contributed to this article.
Copyright (c) 2007 Dow Jones & Company, Inc.
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