Iraq blacklists Chevron for Kurdish oil deals

Tue Jul 24, 2012 12:18pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Ahmed Rasheed

BAGHDAD (Reuters) - Iraq hit out at Chevron Corp over its just-signed oil contract with Kurdistan, barring it from any oil agreements with the central government in a move meant to deter other companies from dealing directly with the semi-autonomous northern region.

Baghdad has long held that contracts signed by the Kurdistan Regional Government (KRG) are illegal, and last year Exxon Mobil Corp aroused its anger by striking a deal with the region while also running a project at a supergiant oilfield in the south.

Baghdad retaliated by banning Exxon from an exploration tender in May.

Chevron followed larger rival Exxon into Kurdistan last week and Baghdad's action on Tuesday will be closely watched by other oil majors, such as France's Total, which is widely expected to be the next to make a Kurdish oil play.

"In line with Oil Ministry policy based on the constitution, the Oil Ministry announces the disqualification of Chevron company and bars it from signing any deals with the federal oil Ministry and its companies," an oil ministry statement said.

Chevron could not immediately be reached for comment. Last week, the company confirmed its purchase of 80 percent of two blocks in Iraq's Kurdistan, an area where oil rights are a subject of fierce dispute.

Whatever the impact on good will, for now Chevron has no material stake in the south to lose. The second largest U.S. oil company after Exxon was qualified to take part in Iraq's four oil and gas licensing rounds, but chose not to.

The company found the commercial terms of Iraq's service contract unworkable, but -- like other investors -- found the production sharing contracts on offer in Kurdistan more attractive, industry sources said.   Continued...

Motorists are shown at gas pumps at a Chevron gasoline station in Burbank, California July 31, 2009. REUTERS/Fred Prouser