Taking advantage of the rising exports from Kurdistan, ExxonMobil Corporation has struck an oil and gas exploration deal with Kurdistan Regional Government (KRG) stirring rival oil companies and stock markets across the globe. After forging such an agreement with the KRG, which has long been in dispute with Iraq’s federal government over its right to issue oil exploration licenses, ExxonMobil has become the first major oil company to take the risk of entering Kurdistan. Most companies have steered away from the region to avoid complications with Baghdad.
Kurdistan is believed to hold an estimated 45 billion barrels of oil and nearly 200,000 billion cubic feet of gas. ExxonMobil will explore hydrocarbons in the six blocks within the region, Michael Howard, communications adviser to the Resources Minister of the Kurdistan Regional Government, told Dow Jones Newswires.
The deals previously signed by other US players like Hess Corporation and Marathon Oil Corporation to explore oil in Kurdistan have been termed as illegal by Baghdad.
This move has also made ExxonMobil the first US consortium to re-enter Iraq after almost three decades in 2009 to develop the West Qurna field. The current deal puts ExxonMobil?s 2.825 million barrel per day project in West Qurna at risk, if Baghdad maintains its blacklist on companies that contract with the Kurdish Regional Government in northern Iraq.
ExxonMobil is already operating in Iraq, producing around 370,000 barrels a day of oil from the West Qurna field, under a service contract with the Iraqi government. Baghdad has previously excluded companies operating in the Kurdish region from oil contracts in the rest of the country.
Sources: ?Zack Investment Research and WSJ