Iraq to Act Against ExxonMobil over KRG Contract

In the continuing row over ExxonMobil‘s contract with the Kurdistan Regional Government, Baghdad has called the deal a violation of the law.

Reuters reports that Iraq’s government said it would move to end a major contract with ExxonMobil, apparently referring to the company’s multi-billion dollar contract with Iraq’s oil ministry to develop the 8.7 billion barrel West Qurna 1 oilfield near Basra.

According to BusinessWeek, Baghdad hasn’t agreed to recognise the validity of drilling contracts in the Kurdish region, and the media office of Hussain al-Shahristani, the deputy prime minister for energy affairs, said Iraq will take measures against oil companies that break the country’s laws in the same way as it did in the past.

Exxon’s agreement in Kurdistan and Baghdad’s response have set up a power struggle between the Iraqi central government and multinational oil companies over the potential resources in the northern Kurdish region.

“Exxon has violated the ministry directions and instructions concerning the companies working in Kurdistan,” said Abdul-Mahdy al-Ameedi, director of the oil ministry’s contracts and licensing directorate.

“It’s a violation of the contract and the law. As a consequence the oil ministry will take steps to end the contract. But this operation will need arrangements,” he said without giving further details.

Exxon has so far not made any statement on the Kurdistan deal, and reportedly has not responded to the oil ministry.

Al-Ameedi said the Kurdish government had also been talking to U.S. oil company Chevron and Italian operator Eni. “We know that there is communication between them. There are talks,” he said.

Chevron has said it continues to be interested in pursuing opportunities in Iraq but that it will not discuss specifics.

(Sources: Reuters, BusinessWeek)

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