Iraq has set a deadline of the next few days for ExxonMobil to explain its position on oil agreements signed with the autonomous Kurdish region, which the central government considers illegal, a government spokesman was reported as saying on Tuesday.

The Kurdistan Regional Government (KRG) announced in November the signing of a deal for six exploration blocks with ExxonMobil, joining smaller players such as Genel Energy and DNO International.

Iraq’s central government has said the deal could jeopardise the US supermajor’s contract to develop the supergiant West Qurna-1 oilfield in southern Iraq. Officials said they are waiting for the company to reply.

“ExxonMobil came to Baghdad last month and asked for more time to return with a reply on Kurdish deals and the government decided to give them a final deadline,” Faisal Abdullah, a spokesman for Deputy Prime Minister for Energy Hussain al-Shahristani, told Reuters.

“The government is waiting for ExxonMobil’s answers to decide its final position towards the company and its deals with Kurdistan. The deadline expires in the coming few days,” Abdullah added.

Late last month, ExxonMobil disclosed in its annual report its plans to explore for oil in Iraqi Kurdistan, breaking months of silence over the investment that has outraged Baghdad.

The KRG said the production sharing contract with ExxonMobil was signed on 18 October last year.

The Iraqi government wants ExxonMobil to make it clear whether it will proceed with the Kurdish deals or freeze or cancel them.

ExxonMobil’s move into Kurdistan has turned the spotlight on tensions between Baghdad’s Arab-dominated central government over who has the authority to develop oilfields in the Kurdish zone.

The central government gives the Kurdish authorities 17% of federal oil revenue and insists on a monopoly on exports.

Shahristani, architect of recent Iraqi oil deals and a strong opponent of Kurdish energy autonomy, said last month ExxonMobil could be blocked from participating in a bidding round for exploration deals in May because of its Kurdish deal.

Iraq has done a raft of deals with foreign players to rehabilitate its war-ravaged oil and gas fields, but the fee-for-service contracts offered by Baghdad are considered less lucrative for investors than production sharing pacts being touted by Kurdistan.

Source: Upstream Online