Iraq is working to cancel Total's share in the Halfaya oilfield after the French company announced it signed agreements to develop oil in autonomous Kurdistan, a senior Iraqi oil official said on Wednesday.
Iraq's central government says oil deals signed with the country's Kurdistan region are illegal. Total announced on Tuesday it had agreed to buy a stake in two blocks in the region, angering Baghdad.
"We are working to cancel Total's stake in the Halfaya contract. We will disqualify and terminate the contract of any company signing a deal with the Kurdistan region without the approval of the oil ministry," Abdul-Mahdy al-Ameedi, director of the ministry's contracts and licensing directorate, told reporters.
Total declined to comment on the Iraqi statement.
The French company follows U.S. rivals Exxon and Chevron into Kurdistan, which analysts say has huge potential reserves and offers more attractive contract terms than the Iraqi central government's deals.
Its move will likely further strain ties between Baghdad and Kurdistan, which are already deeply at odds over a long-running dispute about who controls contested territories and oil rights along their hazy internal frontier.
In June, the company and its partners PetroChina and Petronas started production at Halfaya oilfield. Total has an 18.75 percent stake in the operation.
Total's Chief Executive Christophe de Margerie signaled in February that the company was thinking about Kurdistan investments because terms were better than those offered in a new bidding round by Baghdad for the rest of Iraq.