Iraq May Not Recognize Kurdish Drilling Contracts

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http://www.bloomberg.com/news/2011-11-12/iraq-hasn-t-agreed-to-recognize-kurdish-oil-drilling-contracts.html

Iraq, home to the world’s fourth- largest oil reserves, hasn’t agreed to recognize the validity of drilling contracts in the semi-autonomous Kurdish region after Exxon Mobil Corp. (XOM) signed exploration contracts in the north.

“The Iraqi government will treat any company breaching its laws in the same way it has treated similar companies in the past,” the media office of Hussain al-Shahristani, the country’s deputy prime minister for energy affairs, said today in an e-mailed statement. “The ministry of oil has informed Exxon Mobil of this position.”

Alan Jeffers, a spokesman for Irving, Texas-based Exxon, declined to comment. The Baghdad-based central government and Kurdish authorities haven’t been able to agree on how to oversee drilling and the allocation of revenue from the Persian Gulf nation’s vast crude reserves since the fall of Saddam Hussein in 2003. Relations reached a low point in 2009 when oil exports were temporarily suspended.

Prime Minister Nouri Kamil al-Maliki and Kurdistan Regional Government leader Barham Salih held talks during the past three weeks that had ended the risk that foreign oil producers would be stripped of some oilfield projects as punishment for signing contracts in the Kurdish-controlled north, two people familiar with the talks said earlier this week.