Iraq gives French Total ultimatum over
Kurdistan oil deal
Iraq says Total must end
Kurdistan deal or lose oil stake
French energy giant Total must end its dealings with
the autonomous Kurdistan region in northern Iraq or
sell its stake in a major southern oilfield, Iraq's
top energy official told AFP on Sunday.
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August 13, 2012
BAGHDAD,— Iraq on Sunday gave French energy
giant Total an ultimatum to either end its dealings
with the autonomous Kurdistan region in the north or
to sell its stake in a giant southern oilfield.
Iraq's deputy prime minister responsible for energy
affairs, Hussein al-Shahristani, also said Baghdad
was considering offering foreign oil firms more
lucrative contracts, as he admitted a recent auction
of exploration blocks had not been as successful as
officials had hoped.
Total "was requested to withdraw from this field,
and it has been given a certain period to end this
case by selling its share to another company or by
ending the contract with Kurdistan," Shahristani
He did not specify the time by which Total, which
said on July 31 that it signed an oil exploration
deal with Kurdistan, needed to make a decision.
Kurdish authorities have signed dozens of deals with
foreign energy firms on a production-sharing basis,
contracts regarded as illegal by Baghdad which
insists all such deals must go through the federal
oil ministry and prefers per-barrel service fees.
The agreement between Total and Kurdistan came with
relations between the autonomous region and Baghdad
at a low ebb over multiple festering disputes,
including over oil contracts and territorial claims.
Within a period of weeks, US oil firm Chevron and
Russia's Gazprom have also inked deals with
Kurdistan, after American giant ExxonMobil signed an
agreement with the region last year.
"Total announced that it signed contracts in
Kurdistan and, because of that, the ministry of oil
told them that they had breached Iraqi law,"
Shahristani said. "If it ends its contract with
Kurdistan, it can proceed with the Halfaya field."
Total is a minority member of a consortium led by
China's CNPC and also including Malaysia's Petronas
to extract oil from the Halfaya field in Maysan
province, in a contract awarded in a December 2009
The field, which has known reserves of 4.1 billion
barrels of oil, officially began pumping last month.
It is expected to produce 535,000 barrels of oil per
day within five years.
CNPC has the biggest stake in the consortium at 37.5
percent, followed by Petronas and Total at 18.75
percent each, with Iraq's state-owned South Oil
Company holding a 25-percent stake.
The latest deals between Chevron, Total and Gazprom
and the Kurdish region came after Baghdad held a
public auction in late May for a dozen energy
exploration blocks, but only four contracts were
with analysts attributing the failure to the tough
terms on offer.
In a nod to that criticism, Shahristani said Iraq
was considering modifying the terms.
"We are studying a new model of contract for other
oil fields because the first oil fields (that were
auctioned) were discovered and well-known," he told
"There is a study in the ministry of oil to improve
the model of contract to make it more attractive for
"The fourth bid round was not successful, as we
hoped, and the reason was because the contracts ...
were very tough and did not give a possibility for
the company to accept the high risk of work."
Iraq has proven reserves of 143.1 billion barrels of
oil and 3.2 trillion cubic metres (111.9 trillion
cubic feet) of gas, both of which are among the
highest such deposits in the world.
The country currently produces 3.2 million barrels
per day of oil, with resulting exports accounting
for the lion's share of government income. Baghdad
aims to increase both figures dramatically.
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