Exxon Asks for 'Few More Days' on Iraqi Kurdistan Deal



Exxon Mobil has asked the Iraqi central government to give it "few more days" to decide whether or not it will cancel an exploration deal with Iraqi Kurdistan, a deal which Baghdad strongly opposes, a spokesman for Iraq's Deputy Prime Minister for Energy Hussein al-Shahristani said Tuesday.

Iraq has essentially asked the U.S. giant to choose between its deal with the semi-autonomous northern Iraqi region and its central-government contract to develop the 370,000 barrels-a-day West Qurna Phase 1, and the impasse has also led Exxon to be barred from Iraq's fourth oil-and-gas licensing auction, scheduled for May.

The Iraqi government considers as invalid any deals signed with the Kurdistan Regional Government, or KRG, which in turn insists that such deals comply with the country's constitution. The KRG has signed nearly 50 oil-and-gas deals with international oil companies, mostly second-tier or wildcat explorers, and was hopeful that Exxon's presence would entice other majors.

"[Exxon] has asked the Deputy Prime Minister to give it some more days in order to decide its stance on the contract it signed with Kurdistan," Faisal Abdullah, a spokesman for the Iraqi Oil Ministry, told Dow Jones Newswires. Abdullah said Exxon's request was submitted last week by a company representative who met with Shahristani in Baghdad.

The Iraqi government has sent Exxon Mobil three letters asking it to choose between its deal to explore six areas in Kurdistan, and its contract to develop West Qurna Phase 1, which has proven reserves of 8.7 billion barrels.

"The central government is waiting for Exxon to respond to our letters and on the light of Exxon's response, Baghdad would take a decision," Abdullah said.

Last month, Iraq barred Exxon from bidding in its fourth licensing auction at which 12 promising exploration blocks are up for grabs. Exxon has also been excluded from a contract worth up to $10 billion to build a joint water-injection project in southern Iraq.

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 KRG.

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 in 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, N.Y.-based Hess Corp. (HES), which has also been barred from competing in the fourth energy auction.

Tuesday's comments by the Iraqi government also led to a large sell-off in shares of Gulf Keystone Petroleum Ltd. (GKP.LN), which is active in Iraqi Kurdistan. The London-listed explorer has been seen as a potential takeover target following Exxon Mobil's agreement with the KRG, and analysts said the sharp fall in its share price was a sign that some speculative takeover premium was leaking away.

(Isabel Ordonez in Houston and James Herron in London contributed to this item.)



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