North increases pressure on central Iraq for Exxon accord

ARBIL

A worker repairs an pipe at Rumaila oil fields, near the southern city of Basra. Iraq says it may close south fields to global firms which ignore them in the northern regions. AP photo

The regional administration in northern Iraq is urging the country’s central government for a quick resolution to the dispute over rights to natural resources, the nation’s biggest wealth source, as it insists on implementing deals undersigned earlier.

The regional administration confirmed yesterday it had already signed a long-debated deal with U.S.-based oil major Exxon Mobil on Oct. 18 for six exploration blocks within its area of control.

The statement by the Energy Minister Ashti Hawrami during the Kurdistan-Iraq Oil and Gas conference in Arbil was the regional administration’s first official confirmation of the Exxon deal, the first global major to venture into the region, Reuters reported yesterday.

Participants in the event ending tomorrow include the Turkish consular general in Arbil and the United Kingdom ambassador, along with other Turkish representatives. Mehmet Sepil, the chief executive of Turkey’s Genel Enerji, an energy company controlled by businessman Mehmet Emin Karalehmet, was one of the keynote speakers during the event.

On the Exxon Mobile-northern Iraq deal, Reuters quoted Hawrami as saying that “It is a binding contract. It was signed on the 18th of October 2011.”

Baghdad has in the past said it deems contracts between the regional government and foreign oil companies to be illegal.

Iraq’s government warned Exxon Mobil earlier that any oil exploration contract with the north could result in termination of its deal to develop the West Qurna oilfield.

Abdul-Mahdy al-Ameedi, director of the Iraqi oil ministry’s contracts and licensing directorate, said the central government was aware the U.S. oil major was in talks with the regional administration. “The company Exxon Mobil could face disqualification and the termination of its contract with the Oil Ministry,” Ameedi told Reuters.

Ameedi said such a deal could result in the termination of Exxon’s contract to develop Iraq’s 8.7 billion barrel West Qurna Phase One field.

Exxon and partner Royal Dutch Shell clinched a deal in 2009 to develop West Qurna.

Exxon has so far declined to comment and energy officials from Iraq’s central government did not immediately return a Reuter’s call seeking comment on the regional administration’s statement.

Still, Analysts said Exxon’s participation in the southern deal may be too important for the central government to carry out any threats over the regional deal.

“Baghdad threat to Exxon Mobil is just that, a threat. Baghdad will not cancel the company’s contract in southern Iraq because Exxon Mobil is not a small company and it knows the consequences of every step,” said Ali Hussain Balou, former head of the oil and gas committee in parliament and now an analyst.

The Exxon deal could further northern Iraq’s ambitious plans to boost production in the region.

The chief executive of Norway’s DNO told Reuters yesterday his company would increase crude output capacity at its Kurdish Tawke field to 100,000 barrels-per-day (bpd) next year, although production would stay at 50,000 bpd.

Genel Energy said output at the Taq Taq field is now 90,000 bpd and would hit 120,000 in January.

Debate over new law

Meanwhile, Iraq’s new oil investment law will be submitted to parliament by the end of this year, said Barham Salih, the head of the regional government.

“We agreed with Iraqi Prime Minister Nouri al-Maliki to submit the draft law to parliament before the end of the year,” Salih said yesterday at the opening of the Kurdistan-Iraq Oil & Gas conference organized by CWC Group Ltd. in Erbil, Iraq.

“I believe it will be a major contribution to political stability and economic prosperity in Iraq,” he said, Bloomberg News reported.