Total’s northern Iraq deal angers Baghdad

Total’s northern Iraq deal angers Baghdad

Total’s northern Iraq deal angers Baghdad

A worker inspects pipes at a Basra oil field. The central Iraq government says it may bar some US firms from southern fields. AP photo

Major French oil company Total’s recent move to buy a 35 percent stake in two exploration blocks in Iraq’s north has drawn an angry response from the central Iraqi government, which has been unsuccessfully been trying to bar companies from dealing directly with the Kurdistan Region Government (KRG) there.

Total, which followings its U.S. rivals into the area, was warned by Baghdad on July 31 that it faced “severe” consequences for buying stakes in the Harir and Safen blocks from its U.S. peer Marathon Oil without the central government’s consent.

‘Total will be blacklisted’
“We will punish companies who sign deals without the approval of the central government and the oil ministry,” said Faisal Abdullah, a spokesman for Iraq’s Deputy Prime Minister for Energy Hussain al-Shahristani.

“Unless Total reviews the deals, it will face severe consequences.

Total will be blacklisted for violating Iraqi law,” he said without giving further details.

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

The first exploration well on Harir was drilled on July 31 and the first exploration well on Safen field will be drilled next year, Marathon Oil said.

Chevron, the second largest U.S. energy company, will be barred from contracts in central and southern Iraq as a result of its decision to purchase stakes in two oil-exploration blocks in northern Iraq, Baghdad announced earlier last week.

Furthermore, Iraq last month asked U.S. President Barack Obama to stop Exxon Mobil from exploring for oil in northern Iraq, saying the U.S. company’s actions could have dire consequences for the country’s stability.

The central government Iraqi is also opposing Turkey’s fresh initiative to buy oil directly from the KRG to compensate a fall in supply due to the embargo on Iran.