No easy fix

3 August 2012 By Una Galani Follow @ugalani

More oil majors have decided it’s worth taking a chance on signing deals with the semi-autonomous Kurdish region, against the will of Iraq’s central government. Gazprom, Total and Exxon Mobil may have less to lose than Baghdad. A new approach is needed to maintain a unified Iraq.

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Gazprom Neft on Aug 1 that it had signed two production sharing deals for blocks in Iraq’s northern Kurdistan region. The Russian firm will take 40 percent of the Garmian block and 80 percent of the Shakal block. The blocks contain potential resources of about 3.6 billion barrels of oil equivalent, according to the Russian firm.
Gazprom Neft already has a 30 percent interest in the Badra field located in east Iraq. The field’s reserves amount to 3 billion barrels of oil and production is expected to start in 2013. Under the terms, Gazprom Neft will have its costs reimbursed and will receive a premium of $5.5 per barrel of oil equivalent recovered.
Two days earlier, on July 31, France’s Total announced that it had signed an agreement to acquire a 35 percent interest in two blocks in the Kurdish region held by Marathon Oil.
“We are working to cancel Total’s stake in the Halfaya contract. We will disqualify and terminate the contract of any company signing a deal with the Kurdistan region without the approval of the oil ministry,” said Abdul-Mahdy al-Ameedi, director of the ministry’s contracts and licensing directorate.
U.S. oil major Exxon Mobil confirmed in February that it had negotiated exploration and production contracts with the Kurdistan Regional Government.
Iraq’s central government says oil deals signed with the country’s Kurdistan region are illegal.

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