Statoil is looking at possible opportunities in Kurdistan as the Norwegian state oil company prepares to pull the plug on its participation in the West Qurna 2 project in Iraq, its exploration chief has revealed.

“We are watching Kurdistan very closely and believe it has high potential,” executive vice president for exploration Tim Dodson told a company seminar this week.

Statoil is in the process of transferring its 18.75% stake in West Qurna 2 to Russian operator Lukoil, with the disposal set to be completed later this month.

Dodson said Statoil is exiting the project as “we did not see any upside with the agreement” and also disclosed that the company had pulled out of Iraq’s latest licensing round, where it had been pre-qualified to bid.

“The decision was due to the fiscal terms that were being offered, not the resources under the ground,” he explained.

Iraq has faced criticism from international oil companies over the high level of government take on production, as well as fiscal terms, in technical service contracts being offered by the Baghdad government, which has tried to make the deals more attractive in the new round.

There is also a high level of uncertainty over such deals due to ongoing wrangling in parliament over passage of a hydrocarbon law that is necessary to provide political security for investments.

By contrast, players entering Iraq’s semi-autonomous region of Kurdistan are able to sign more lucrative production sharing contracts, although they have incurred the wrath of Baghdad, which claims such deals are illegal.

Dodson said Kurdistan has “completely different terms and conditions”.

However, if Statoil does decide to enter Kurdistan, it could in future risk the same fate as US supermajor ExxonMobil, which has seen the door slammed in its face by Iraq and was excluded from the round after signing exploration deals with the Kurdistan Regional Government.

Source: Upstream Online