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Exxon Mobil has told Baghdad it will not break ground on its oil blocs in Iraqi Kurdistan until the central government in Baghdad approves the contracts, Deputy Prime Minister for Energy, Hussain al-Shahristani, said said on Wednesday.

Shahristani has indicated many times that such approval was unlikely to be granted. Baghdad has threatened to exclude Exxon from its upcoming fourth energy licensing round, and the minister said a decision had yet to be made on whether it could take part.

The U.S. major, which is also leading the development of the supergiant West Qurna-1 oilfield in southern Iraq, has sent two letters to the oil ministry confirming its decision to freeze its Kurdish deals.

(Source: Reuters)

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Iraq Business News is delighted to bring you the latest Iraq Market Tracker report from Dunia Frontier Consultants. The market tracker highlights the activities and market performance of a basket of publicly traded firms who derive a significant percentage of their revenues from operations in Iraq, but are traded on foreign exchanges: a proxy Iraq play as much as practicable. It also identifies and analyzes the primary political and security events that occur in country that have market-moving implications.

Click here to access the report.

Companies Mentioned:

DNO International, Exxon, Genel Energy, Gulf Keystone, Shell, Total, WesternZagros

Action Calls:

• Baghdad and Erbil step back from precipice: Moderation has returned, hopefully signalling negotiations are back on track.
• DNO says production hurt in Iraq: Volatility on Erbil-Baghdad has a direct impact on Kurdish oil shares.
• Iraq signs MoU with Shell for huge petrochemical plant: Baghdad's favorite foil to Exxon gets rewarded.

Headlines:

• Rumored move to Erbil for Talabani: Good for Kurdish unity, good for negotiating with Baghdad.
• Less than 6 Hours of Power this summer in Dhi Qar: Sadr will have look elsewhere to criticize, since his man is PC President in Dhi Qar.

Calendar Events Discussed:

• April 20 - Rewritten contract terms expected for 4th Oil and Gas Auction

Click here to access the report, or to add your email address to Dunia's mailing list to receive the Iraq Market Tracker via email.

Iraq's improved relations with its neighbours have been particularly evident in recent times.

Following Prime Minister Nouri al-Maliki's two-day visit to Kuwait in March, Iraq agreed to go ahead with the Iraq-Kuwait Boundary Maintenance Project, and to transfer its share of funds allocated for the completion of this project to the UN.

The two governments also agreed during the visit to hold a second high-level meeting later this month to review all pending issues between the two countries, including Iraq's outstanding obligations under Chapter VII.

The relationship was no doubt helped by the attendance of the Emir of Kuwait, His Highness Sheikh Sabah al-Ahmed al-Sabah, at the Arab League Summit in Baghdad, an event described by UN Special Representative Martin Kobler as marking "Iraq's re-emergence as a major actor in the region".

Meanwhile, its relations with Saudi Arabia also continue to improve, with Riyadh's appointment of an envoy to Iraq, and discussions on the opening of the Ar Ar border post between the two countries.

With external relations strenthening, it is all the more disappointing that internal relations within the country are deteriorating. Tensions between the political blocks are impeding progress, while the stand-off between the Kurdistan Region and the Baghdad government causes much uncertainty.

All parties need to apply the same level of commitment to resolving these problems as they have to bolstering international relations, for the sake of their common futures.

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Iraq Business News is delighted to bring you the latest Iraq Market Tracker report from Dunia Frontier Consultants. The market tracker highlights the activities and market performance of a basket of publicly traded firms who derive a significant percentage of their revenues from operations in Iraq, but are traded on foreign exchanges: a proxy Iraq play as much as practicable. It also identifies and analyzes the primary political and security events that occur in country that have market-moving implications.

Click here to access the report.

Companies Mentioned:

Abu Dhabi National Energy Company (Taqa), Exxon, WesternZagros

Action Calls:

• Erbil-Baghdad escalation continues: Not likely to blow up now, but watch for indications that red lines are being crossed.
• Taqa doubles down in Kurdish region: One sign of faith in Kurdish future. Will it pay off like WesternZagros?

Headlines:

• VP Hashemi Leaves Kurdistan for Qatar, KSA Visits: His return could signal of KRG strength and defiance.
• Potential Violence Looming after Attempted Hit: Reminder that Arab street can target Kurds too.

Calendar Events Discussed:

• April ? - proposed date for National Reconciliation Conference
• April 20 - Rewritten contract terms expected for 4th Oil and Gas Auction

Click here to access the report, or to add your email address to Dunia's mailing list to receive the Iraq Market Tracker via email.

Further to the rumours that Exxon Mobil plans to abandon it's contract at West Qurna-1 in favour of pursuing exploration deals in Iraqi Kurdistan, the Kurdistan Regional Government (KRG) has issued the following statement:

"In a meeting with President Masoud Barzani in Washington DC this week, the CEO of Exxon Mobil, Rex Tillerson [pictured] stated that Exxon Mobil will continue its operations in the Kurdistan Region.

"The oil major signed a contract with the KRG last year to explore six fields in Kurdistan. Mr. Tillerson said Exxon Mobil is committed to the contracts that it has signed with both the Iraq government and with the Kurdistan Regional Government (KRG)."

This appears to contradict a recent statement from the Iraqi Ministry for Oil, in which it has claimed to have received a second letter from Exxon in which it says it has “frozen” its contracts with the Kurdistan Regional Government (KRG).

Iraq Business News sources in the southern oil province of Basra say they are astonished that Exxon appears to be putting priority on its operations in the Kurdish North of the country.

According to a report from Reuters, Shell, Exxon's partner at West Qurna-1, backed out of a joint deal with Exxon and the KRG at the last minute, for fear of angering the administration in Baghdad.

Sources in Baghdad have told Iraq Business News that Exxon Mobil has decided to abandon its contract at the giant West Qurna-1 oilfield in Southern Iraq, in favour of pursuing its interests in Iraqi Kurdistan.

In recent days the Iraqi Ministry for Oil has claimed to have received a second letter from Exxon in which it says it has "frozen" its contracts with the Kurdistan Regional Government (KRG); the KRG, on the other hand, denies that this is the case, and has described Baghdad's claims as "rubbish".

Exxon CEO Rex Tillerson said earlier last month that the company was committed to both exploring in Kurdistan, as well as to expanding its West Qurna output.

If this latest rumour is true, it would be a huge blow to the government of Nouri al-Maliki, and could jeopardise the planned 4th round of energy licences due to be auctioned at the end of May.

Exxon is the lead contractor at West Qurna-1, with a 60% stake, while Shell has 15% and the remaining 25% belongs to the Iraqi state.

Ashti Hawrami, the natural resources minister of the Kurdistan Regional Government (KRG), said on Monday that Exxon Mobil is honoring its oil exploration contracts in the region, contradicting the statement from Baghdad's Oil Minster, Abdul Kareem Luaibi [Elaibi], who said the deal had been frozen.

“What comes out of Baghdad is about 90 percent, with respect, rubbish,” Hawrami said, adding that he regional government hears from Exxon Mobil on an “almost daily basis”.

According to the report from Bloomberg, an Exxon Mobil spokesman said the company had no comment regarding contracts in Kurdistan.

“It’s a loss for Iraq if they continue with this madness of this policy,” said Hawrami. “It has to be resolved in a few weeks and months ahead.”

He said the Kurds will resume the shipments when they get a “clear understanding” that Iraq will pay for the oil.

The Kurdish region is producing about 100,000 barrels of oil a day after cutting off the shipments, with most of the product refined and consumed locally, Hawrami said.

In response to accusations that oil is being smuggled into Iran, Harwami said it was transported through Iran as other routes were not available at the moment.

The Kurdistan government is seeking contractors to build a crude-oil pipeline from Kurdistan through Turkey, Hawrami said. Construction would start this year and be complete by late 2013, he said.

(Source: Bloomberg)

Iraqi Oil Minister Abdul Kareem Luaibi [Elaibi] said on Monday that Exxon Mobil had sent a second letter to Iraq's oil ministry confirming its decision to freeze its oil deals with the Kurdistan Regional Governmment (KRG), according to a report from Reuters.

The decision may lead the Iraqi government to allow Exxon Mobil to re-enter the bidding for exploration contracts, having previously been excluded in retaliation for its agreement with the Kurdish authorities.

(Sources: Reuters, NASDAQ)

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Iraq Business News is delighted to bring you the latest Iraq Market Tracker report from Dunia Frontier Consultants. The market tracker highlights the activities and market performance of a basket of publicly traded firms who derive a significant percentage of their revenues from operations in Iraq, but are traded on foreign exchanges: a proxy Iraq play as much as practicable. It also identifies and analyzes the primary political and security events that occur in country that have market-moving implications.

Click here to access the report.

Companies Mentioned:

BP, ExxonMobil, Total, WesternZagros

Action Calls:

• Stakes rise as GoI courts BP in Kirkuk: Definite escalation, but let's hope it stays war of words. Watch Kurdish peshmerga around Kirkuk.
• WesternZagros climbs 18% on oil find: Reminder of WZR's promise, trading around core position to profit from volatility.

Headlines:

• Arab League summit a qualified success: AL summit concludes without significant security breach, strengthening Maliki.
• National conference date proposed: Most likely stillborn, but if it gains traction, something may be afoot.

Calendar Events Discussed:

• This week - Arab League summit aftermath
• April 5 - proposed date for National Reconciliation Conference
• April 20 - Rewritten contract terms expected for 4th Oil and Gas Auction

Click here to access the report, or to add your email address to Dunia's mailing list to receive the Iraq Market Tracker via email.

Advertising Feature

Iraq Business News is delighted to bring you the latest Iraq Market Tracker report from Dunia Frontier Consultants. The market tracker highlights the activities and market performance of a basket of publicly traded firms who derive a significant percentage of their revenues from operations in Iraq, but are traded on foreign exchanges: a proxy Iraq play as much as practicable. It also identifies and analyzes the primary political and security events that occur in country that have market-moving implications.

Click here to access the report.

Companies Mentioned:

DNO, ExxonMobil, Genel Energy

Action Calls:

• Barzani speech takes aim at Iraqi government: Likely indicates negotiations, but don't expect break on Exxon until after Arab League summit.
• DNO, Genel Energy hail success in Iraq: AWith their first earnings announcement under their belt, could Genel be better play than DNO?

Headlines:

• Attacks and precautions as Baghdad gears up for Arab League: Al Qaeda's big chance to discredit Maliki is next week - look for action from both sides.
• Sadr holds major demonstration in Basra: Sadr shows continuing strength Arab street, but sidesteps Maliki's show in Baghdad.

Calendar Events Discussed:

• 29 March - Arab League summit
• April - National Reconciliation Conference

Click here to access the report, or to add your email address to Dunia's mailing list to receive the Iraq Market Tracker via email.