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.
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.
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