Iraq Warns Total over Kurdistan Deals

Source: Reuters 2/12/2012, Location: Middle East

Total should not sign oil deals with the Kurdistan region without Iraq's approval, Deputy Prime Minister for Energy Hussain al-Shahristani said, warning the French major would bear the "full consequences" if it did. Total said it was considering possible investments in semi-autonomous Iraqi Kurdistan, which is locked in a long-standing feud with the central government in Baghdad over that controls the OPEC country's oil rights and territories.

Exxon Mobil became the first oil major to sign up with Iraqi Kurdistan late last year, prompting Baghdad to reject that deal as illegal and threaten to end Exxon's contract for the West Qurna-1 oilfield in the south of the country. "The position of the Iraqi government will be the same as with the other oil companies, that no company has a right to sign a contract without the approval of the central government of Iraq," Shahristani told Reuters when asked about a possible Total deal with Kurdistan.

"Any such contract has no standing with the Iraqi government, and the companies have no right to work on the Iraqi territories and they bear the full consequences."

Shahristani was speaking after Iraq opened a new Gulf crude export outlet in the southern oil hub of Basra on Sunday, clearing the way for Baghdad to increase exports by around 300,000 barrels per day soon after crude begins loading.

Recovering after years of war and sanctions, Iraq signed deals with major oil companies like Shell, Exxon and BP to develop its southern oilfields.

Exxon has yet to reply to Baghdad over its decision to move into Kurdistan.

But Shahristani said the U.S. major would not be able to participate for now in Iraq's fourth energy bidding round because of its agreements with Kurdistan, which has its own regional government and military force.

"Exxon was informed about the Iraqi government position clearly and openly. They asked for some time, and we are waiting for their final answer to inform them of our final decision," Shahristani said.

"But right now they are not qualified to participate in the fourth bidding round," he said.


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