Baghdad sees any contracts signed by Kurdistan but not approved by the central government's oil ministry as invalid
An Iraqi welder works at an oil refinery near the village of Taq Taq in the autonomous Iraqi region of Kurdistan on May 31, 2009. French energy giant Total said Tuesday it had signed an oil exploration deal in the Kurdistan region in Iraq's north, a move likely to put it at odds with the central government in Baghdad. © Ali al-Saadi - AFP
Baghdad sees any contracts signed by Kurdistan but not approved by the central government's oil ministry as invalid
AFP
Last updated: July 31, 2012

French oil group Total signs deal in Iraqi Kurdistan

French energy giant Total said on Tuesday it has signed an oil exploration deal for areas in the Kurdistan region of northern Iraq, putting it on a collision course with the central government in Baghdad.

The agreement comes with relations between the autonomous region and Baghdad at a low ebb over multiple festering disputes, including over oil contracts and territorial claims.

"Total has completed an acquisition of 35 percent interest in two blocks, Harir and Safen, held by Marathon Oil," a US company, Total said in a statement.

"With this transaction, Marathon Oil reduces its stake to a 45 percent working (56.25 percent paying) interest in each of the two blocks while remaining operator of the Harir block and exploration operator of the Safen block," a statement on Marathon's website said.

"A Total subsidiary will become the operator of any development of the Safen block. The Kurdistan Regional Government continues to have a fully carried 20 percent interest in each of the blocks," it said.

The Harir and Safen blocks are 705 square kilometres (272 square miles) and 424 square kilometres (163 square miles), respectively, the statement said.

Iraq, which insists all oil deals must go through the central government and regards any that do not as illegal, was quick to condemn the move.

"We consider this contract illegal and unconstitutional, and we will deal with this company (Total) the same way that we have dealt previously with companies that violated Iraqi law," said Faisal Abdullah, the spokesman for Hussein al-Shahristani, Iraq's deputy prime minister for energy affairs.

"This is our right. There are constitutional and legal points that give us this right," said Sirwan Abu Bakir, the adviser to Kurdistan's natural resources minister.

The Total deal came a week after Iraq barred US energy giant Chevron from working in non-Kurdish parts of the country after it bought two exploration blocks in the autonomous Kurdish region against Baghdad's wishes.

Shahristani has previously warned Total that any deal with Kurdistan would be illegal.

US oil giant Exxon signed an exploration deal with Kurdistan in October, a move opposed by Baghdad to the extent that Prime Minister Nuri al-Maliki was said to have appealed to US President Barack Obama to help reverse it.

Total is part of a consortium along with China's CNPC and the Malaysian group Petronas seeking to ramp up output at the Halfaya field in Iraq's southern Maysan province, which has proven reserves of about 4.1 billion barrels.

Iraq awarded the contract in December 2009.

Baghdad and Arbil are at odds over issues including Kurdistan's refusal to seek approval from the central government for oil contracts it has awarded to foreign firms, and over a swathe of disputed territory in northern Iraq.

A high-ranking Iraqi official on Sunday said security agencies had uncovered a secret weapons deal between Kurdistan and an unnamed foreign country.

That announcement came after a top Kurdish security official said Kurdish peshmerga security forces had on Wednesday prevented soldiers sent by Baghdad from reaching a disputed area that borders Syria.

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