Thursday 24 July 2014
 
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OIL DEAL

Total signs Kurdistan deal; Iraq angry

Baghdad, August 1, 2012

 

French oil major Total has bought a 35 percent stake in two exploration blocks in Iraq's Kurdistan region, drawing an angry response from the Iraqi government which has tried to bar companies from dealing directly with the semi-autonomous region.
 
Total, which is following US rivals into the area, was warned by Baghdad on Tuesday it faced "severe" consequences for buying the stakes in the Harir and Safen blocks from US peer Marathon Oil without the government's consent.
 
"We will punish companies who sign deals without the approval of the central government and the oil ministry," said Faisal Abdullah, a spokesman for Iraq's Deputy Prime Minister for Energy Hussain al-Shahristani.
 
"Unless Total reviews the deals, it will face severe consequences... Total will be blacklisted for violating Iraqi law," he said without giving further details.
 
Total, seeking to tap Iraqi Kurdistan's vast oil reserves and bank on more attractive terms than in the south of the country, ignored earlier veiled threats to refrain from deals with the Kurdish region.
 
"The Baghdad authorities were kept informed of Total's intentions," a Total spokesman said on Tuesday, declining to comment further after the Iraqi official's comments.
 
Total's investment comes as it seeks to grow its annual oil production by 2.5 percent on average at a price of $100 a barrel through to 2015. But lower output in this year's second quarter due to several disruptions led Total to refrain from reiterating the target for this year, referring to an investor day in September for details.
 
A spokesman for the autonomous Kurdistan Regional Government (KRG) did not immediately answer a request for details.
 
In Paris, the Energy Ministry and the Prime Minister's office had no comment on the matter.
 
Total's Chief Executive Christophe de Margerie had signalled in February that the group was considering investments in Kurdistan since contractual conditions there were better than in the rest of Iraq where it and its partners began production at the south-eastern Halfaya field in June.
 
Both fields in the Marathon Oil deal are located south of Iraq's border with Turkey. Seismic exploration of both fields is expected to be completed by September.
 
The first exploration well on the Harir field was drilled on Monday and the first exploration well on the Safen field will be drilled next year, Marathon Oil said.
 
"These are enormous blocks. There's rarely a disappointment in exploration in Kurdistan," said a Paris-based analyst who declined to be named.
 
"They have a permit in the south of Iraq and at the worst the government could renegotiate concessions or withdraw the license. But these wells are not very profitable," he said. - Reuters



Tags: Oil | Total | Iraq | Kurdistan |

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