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Exxon gets warned by Iraq on Kurdish contracts amid plans for BP development

29 Jan 2013
The oil minister of Iraq asked Exxon Mobil Corp. (XOM) to stop dealing with Kurds if it wants to work with the central government even as he carried on with plans for BP Plc (BP/) for developing fields in northern areas claimed by the Kurdish authorities. Chevron Corp. (CVX), Total SA (FP) and Exxon, which operates the West Qurna- 1 oil field in southern Iraq, are amongst companies that have infuriated the central government with proposals to explore in the Kurdish area. While the Baghdad authorities do not recognize contracts signed by the semi-autonomous Kurdistan Regional Government without their permission, foreign investors say Kurdish authorities offer them even more attractive terms. Abdul Kareem al-Luaibi said in Baghdad on Sunday 27th January, 2013 that any company that signs contracts without the approval of the central government, they do not deal with them. He also said that they cannot allow Exxon to step over the constitution for working in both places at the same time; they either have to choose Kurdistan or Iraq for working with. Iraq will be waiting for their final answer in the coming few days. The Central Government of Iraq and the Kurds entangled in a feud over disputed land and the sharing of energy profit. The Kurdistan Regional Government stopped exports of crude by pipeline last month, with delivery at present limited to volumes being trucked to Turkey. Iraq is seeking for boosting oil sales to reconstruct the economy after decades of battles and sanctions. Disputed Territory In turn, the Kurdish authorities said a statement on 17th January, 2013 that the central government would be acting illegally if it proceeds with a plan to allow BP, Europe’s second-largest energy company, to work on oil fields in disputed area. BP made a good offer for developing the Kirkuk fields and the Oil Ministry in Baghdad has sent the proposal to the government energy committee for approval, al-Luaibi said on Sunday. Iraq began exporting crude through a second single-point mooring facility in the south part of the country, al-Luaibi told to the media on 27th January, 2013. The nation also went through an agreement and signed that with Kuwait Energy Co. and Dubai-based partner Dragon Oil Plc. (DGO) for exploring and improving oil in Block 9 along Iraq’s border with Iran. Kuwait Energy plans for investing their $ 125 million in the field as the company is highly positive about finding commercial quantities of oil, Chief Executive Officer Sara Akbar said at a ceremony in Baghdad. Turkiye Petrolleri AO was replaced with Kuwait Energy by Iraq for the project to improve the block in November, without giving any public explanation. The contract is one of four licenses awarded since an energy auction last year. Iraq holds the fifth largest position in the world as the crude reserving country, according to BP’s Statistical Review of World Energy. The nation is the biggest producer, after Saudi Arabia, in the Organization of Petroleum Exporting Countries. Source: [Bloomberg]
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