Total in oil deal with Iraq Kurds

THE French oil company Total has bought a 35% stake in two exploration blocks in the Kurdistan region of Iraq, risking the wrath of the Iraqi government which has tried to bar companies from dealing directly with the semiautonomous region.

Total said yesterday it had bought stakes in the Harir and Safen blocks from US peer Marathon Oil, ignoring a warning from Baghdad to refrain from making deals with the northern region without its approval.

“The Baghdad authorities were kept informed of Total’s intentions,” a Total spokesman said.

Both fields in the Marathon Oil deal are located south of Iraq’s border with Turkey. Seismic exploration is expected to be completed by next month.

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.

The deal will further strain ties between Baghdad and the Kurdistan regional government (KRG), which are caught up in a long-running political feud over oil rights and disputed territories along their internal border.

Exxon Mobil was the first oil major to move into the northern region last October, when it signed a deal with the KRG.

Norway’s Statoil is also looking at KRG exploration deals, industry sources have said.

Baghdad considers any oil contracts signed with Kurdistan illegal and has blacklisted Chevron over a deal it entered into with Kurdistan last month.

Autonomous since 1991, Kurdistan has its own government and armed forces, but still relies on the central government for its budget drawn from oil revenues.

Kurdish officials accuse Shiite Prime Minister Nuri al-Maliki of amassing power at the expense of Sunni and Kurdish minorities, but Baghdad says Kurdistan is violating the constitution by signing what it says are illegal deals with foreign companies. Reuters