Tuesday, Mar 06, 2012
-- Exxon requests more time to decide on exploration deal with Iraqi Kurdistan
-- Iraqi government forcing U.S. major to choose between deals with Iraqi Kurdistan and deals with Baghdad
-- Exxon already excluded from Iraq's next oil-and-gas licensing round
(Adds details throughout.)
By Hassan Hafidh
Of DOW JONES NEWSWIRES
Exxon Mobil Corp. (XOM) 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.
-By Hassan Hafidh, Dow Jones Newswires; +962 799 831 831; hassan.hafidh@dowjones.com
(Isabel Ordonez in Houston and James Herron in London contributed to this item.)
(END) Dow Jones Newswires
