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By John Lee.

Indonesia's Coordinating Minister for the Economy, Hatta Rajasa (pictured), has said Pertamina is considering taking a stake of up to 20 percent in the West Qurna-I block, which is owned by Exxon Mobil.

According to a report from Fox Business, Mr. Rajasa told reporters:

"Exxon has got a new oil field in another part of Iraq and because of that it has to sell its stake in the West Tuba [sic] as required by the regulation set by the government of Iraq."

(Source: Fox Business)

By John Lee.

The Iraqi parliament passed the 2013 budget of the 138 trillion Iraqi dinars ($118.5 billion) on Thursday, allocating to Kurdistan just a fraction of the oil revenue the region requested, reports Wall Street Journal.

Ibrahim al-Mutlaq, a member of the parliamentary finance committee, said the budget allocates 750 billion Iraqi dinars ($644 million) for oil companies operating in the semi-autonomous region, which include majors such as Exxon Mobil, Gazprom Neft and Chevron; the Kurdish government had asked for $3.5 billion, including outstanding payments covering all exports between 2010 and 2013.

The budget decision adds to existing tensions between the Kurdish region and Baghdad over oil exploration rights, trade with Turkey and the redevelopment of oil fields in a disputed territory.

Kurdish lawmakers boycotted the session which led to the passing of the budget, Mr. al-Mutlaq said.

Jaber al-Jaberi, an Iraqiya MP among those who boycotted the session, said he expects the Kurds to go to the federal court to disrupt the budget.

(Sources: WSJ, Reuters)

The Chairman of PetroChina has told Reuters that his company is willing to join Exxon Mobil in the 400,000-bpd West Qurna-1 oilfield project.

Jiang Jiemin (pictured) told the news agency:

"We are willing to jointly develop the project with Exxon Mobil. Exxon Mobil welcomed our participation and the Iraqi government also supports us joining the development ... The asset value of the whole project is massive, but near-term capital spending required is not that huge."

He went on to say that the PetroChina, owned by the China National Petroleum Corporation (CNPC), would "thoroughly evaluate the project" and make an investment decision at an "appropriate" time.

Exxon is understood to be considering various options to resolve the difficulties caused by the company's activities in Iraqi Kurdistan, which Baghdad regards as illegal, and the Ministry of Oil may be willing to offer better terms. One option for Exxon may to to sell part of its 60 percent stake while remaining as operator.

CNPC made a play for Exxon's full stake in West Qurna-1 at the end of last year, but the U.S. company was not satisfied with the bid, according to industry sources.

(Source: Reuters)

By John Lee.

Exxon Mobil has begun exploration for oil in Kurdistan Region, according to a report from PUKmedia.

Safeen Dezae, Spokesman for the KRG, told the news agency that the company began its first stage of exploration with the scoping of locations; the second stage will involve exploratory drilling.

Regarding the impact of the company's working in the Region on the Federal government,

Dezae said that the constitution allowed the province or region to deal with newly found oil fields, adding that there are no legal or constitutional problems regarding this matter.

He called for the passing of the oil and gas law to resolve any conflicts,

(Source: PUKmedia)

By John Lee.

Oil giant ExxonMobil has reportedly hired former U.S. ambassador to Iraq, James Jeffrey (pictured), as a consultant.

The company was recently told that it must choose between working in Iraq's southern oilfields, where it operates the $50 billion West Qurna 1 oilfield, or in Kurdistan, where it has signed exploration deals.

Exxon’s chief executive Rex Tillerson met with Iraqi Prime Minister Nouri al-Maliki and with Kurdistan’s President Barzani recently to discuss operations in both areas, while industry sources said the US oil major was considering an offer from Baghdad.

According to Reuters, it was unclear whether James Jeffrey was hired specifically to handle the dilemma and its fallout, but industry sources and diplomats said it was likely to work in the central government's favour.

"He probably has better relations in Baghdad than in Arbil," said a former U.S. diplomat on condition of anonymity.

Iraq Oil Report says that when ExxonMobil signed the six oil deals with the Kurdistan Regional Government (KRG) in October 2011, then-U.S. Ambassador James Jeffrey was "furious", as he was forced to manage the aftermath.

(Sources: Reuters, Iraq Oil Report)

By John Lee.

Iraq has again told Exxon Mobil that it must choose between working in its southern oilfields or in Kurdistan.

Reuters reports that Oil Minister Abdul Kareem Luaibi [Elaibi] expects the company to make a final decision within a few days, adding:

"We made it clear to Exxon in the last meeting that the answer we expected from them is either to work in the Kurdistan region or to work in southern Iraq ... Exxon Mobil cannot work in both fields at the same time."

"Other oil companies that signed deals in Kurdistan region should face the same scenario", said Luaibi, "and we have informed them".

Exxon's chief executive Rex Tillerson met with Iraqi Prime Minister Nouri al-Maliki and with Kurdistan's President Barzani last week to discuss operations in both areas, while industry sources said the US oil major was considering an offer from Baghdad.

(Source: Reuters)

By John Lee.

Prime Minister Nouri al-Maliki held talks with ExxonMobil chief Rex Tillerson (pictured) on Monday.

AFP reports that the meeting was the first between the two since the firm signed an oil exploration agreement with Kurdistan in October 2011, a move which angered Baghdad, which has said the company must choose between its deals with Baghdad and Erbil.

Late last year Exxon informed Baghdad that it wanted to sell its stake in the West Qurna-1 project, indicating it would focus on the controversial Kurdish deal.

Maliki appeared to once again rule out the sort of production-sharing deals that Exxon has signed with Kurdistan, arguing that Iraq's oil "belongs to all Iraqis ... Iraqis are partners in the oil that is discovered in any part of Iraq, they cannot be partners in Basra and not partners in other areas".

Tillerson is said to have expressed Exxon's keenness to "continue its work and expand in Iraq", while also apparently mentioning "important decisions in this area" that would be taken, though no further details were provided.

(Source: AFP)

A new report from Deloitte, entitled "Mergers and Acquisitions in the Oil and Gas Industry -- Current upstream M&A issues and transaction considerations", looks at the factors affecting investment in Iraq:

"Iraqi production, which has now passed the 3 million barrel per day level, is benefiting from foreign investors with the expertise to exploit these resources.

"The question remains as to whether these nations will achieve optimum production levels or whether they will continue to face constraints due to outdated infrastructure, political challenges (such as in Iraq), policy uncertainty and continued security threats.

"The fiscal terms being offered by governments have been on the top of the agenda for contractors with assets in countries affected by the Arab Spring and consequent regime change. This issue has been under the spotlight recently in Iraq and the semi-autonomous Kurdistan Regional Government (KRG) in the north.

"Whilst some E&P companies have been involved in the auctions for new exploration rights during the first half of 2012, the fee-based service contracts on offer by the Government of Federal Iraq, rather than the production sharing framework, have discouraged many investors who have been required to price in additional risk as seen in the fourth Iraq licensing rounds in May 2012.

"Contracts on offer by the KRG that require more development expenditure are offering production sharing arrangements which are attracting more interest, although there is pressure from Baghdad on IOCs and super-majors from operating in Kurdistan; however, this has not prevented ExxonMobil, Total, Gazprom and Chevron from entering into such agreements.

"Although Iraqi oil is generally regarded as ‘Easy oil’ (low cost to produce), IOCs have been reluctant to commit to costly exploration projects on the terms on offer, especially as a Federal Oil Law has yet to be ratified and adopted.

"Recent press coverage about Exxon Mobil’s intention to leave the giant West Qurna-1 project in Federal Iraq is conceivably a result of less attractive terms currently on offer."

Please click here to download the full report.

(Source: Deloitte)

By Christine van den Toorn.

This article was originally published by Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

One of the most peaceful towns in Iraq, near one of the most dangerous cities in Iraq, is under threat. Bashiqa is in danger of becoming a troubled metaphor for the conflicts that threaten the rest of Iraq.

For about a decade, Bashiqa, a small village only 30 kilometres from Mosul, arguably the most dangerous place in Iraq, has avoided the violence that has plagued the rest of the country. Until recently, that is.

At the end of October, two car bombs exploded just outside the main city checkpoint which resulted in three deaths and over twenty casualties. The checkpoint is just beyond downtown Bashiqa.

And just over a week before that during the annual holiday of Eid, two car bombs were discovered in the rural Shabak-dominated villages around Bashiqa. One exploded - though there were no casualties. The other was discovered before it was able to be detonated - many locals think it was on the way to Mam Ritha, a centuries old Shiite Muslim shrine.

Yet in the past, Bashiqa’s locals have been proud that there have been explosions everywhere in Iraq “ila Bashiqa” (“except for Bashiqa”).

Why then, has violence now come to the town after so many years?

By John Lee.

Reuters reports that LUKoil, Russian’s biggest non-state oil producer, which is believed to be considering buying ExxonMobil's stake in the West Qurna-1 oil field, has bought oil from Kurdistan in defiance of Baghdad.

Baghdad has long insisted it has the sole right to export oil, but LUKoil's Geneva-based trading arm Litasco has become the third company to buy Kurdish condensate (very light oil), five industry sources have told the news agency.

The other companies to have bought directly from Kurdistan are Trafigura and Vitol; Swiss trader Vitol has just signed a deal to sell gasoil to Iraq.

Those earlier deals provoked an angry response from the Iraqi central government, which said it had the right to "legally pursue all those who participate in smuggling", but according to Reuters Baghdad seems to be turning a blind eye on this occasion.

"After checking with concerned parties, we got confirmation that LUKoil has not purchased any kind of crude for the benefit of the KRG," said an official from Iraq's State Oil Marketing Organisation (SOMO). Iraqi government officials declined to comment.

Industry sources told Reuters that Litasco had chartered the tanker Cielo di Napoli to load around 19,000 tonnes of the Kurdish condensate from the port of Toros at Ceyhan in Turkey; The tanker sailed on 21st November.

Litasco won the tender at a $3.00 discount to naphtha prices, beating competing bids from Trafigura and Socar, one participant said, and bought the condensate through the intermediary Powertrans in a public tender.

(Source: Reuters)