Major IOCs Voting With Their Feet

By Padraig O’Hannelly.

Tensions between Iraqi Kurdistan and the central government in Baghdad have increased significantly in recent times, both politically and commercially.

On the political front, the “difference of opinion” about the sending of Iraqi troops to the border between Iraqi Kurdistan and Syria was eclipsed by reports that the Kurdistan Regional Government has been secretly buying weapons.

Commercially, we’ve seen two more major oil companies declare their hands, with both Chevron and Total taking stakes in Kurdistan in defiance of warnings from Baghdad. The Oil Ministry used some strong language in its condemnation of the Chevron deal, and is reportedly in the process of removing Total from the Halfaya field.

Attempts to put political pressure on ExxonMobil, the first of the majors to enter Kurdistan, also appear to have failed.

Taken together with the disappointing response to the fourth energy bidding round, these deals challenge any assumption that Baghdad can simply pull rank on Erbil when it comes to securing the involvement of top-tier oil companies; given a choice between poorly-paying service contracts in the South and potentially lucrative production sharing contracts in the North, it’s increasingly clear which they prefer.

3 Responses to Major IOCs Voting With Their Feet

  1. Mustafa August 3, 2012 at 9:48 am #

    Ministry of Oil or the Central Government shall stop cancelling contracts and start to think what is their mistake. Because soon or later they will beg this companies to return South..What a pity that unqualified persons are on critic positions in the Government and screwing the future of all Iraqi people…

  2. Re da Caste August 3, 2012 at 12:45 pm #

    When will Sharistani condemn and punish Gazprom?
    The best that can happen is that Baghdad tries to throw Exxon, Chevron, Total and Gazprom out from southern Irak.
    In that case the Oil Ministry will immediately be sued on the international court where they will certainly lose.
    Game, set and match KRG.
    It will be interesting to follow: will these guys make trouble with Gazprom? I do not think so…

  3. sheytanelkebir August 9, 2012 at 11:32 pm #

    Actually Iraqi oil ministry is quite happy with the current situation. Iraq has secured increased production for the existing fields, and most importantly the Iraqi Drilling Company is in a Joint Venture with Schlumberger 50/50 (the largest oilfield services company in the world) and along with Baker hughes, saipem, weatherford etc… who are the biggest names in doing the “actual work” on oil fields working in Iraq… I don’t think they have much to worry about… 4 of the 12 contracts in the latest round were taken… and the rest are being negotiated with the companies bidding again…

    what is better for IRAQ? paying $50 a barrel or $5 a barrel. simple maths.