Iraq excludes Exxon from May energy auction

[April 19, 2012]  BAGHDAD (AP) -- Iraq's oil ministry said Thursday that the U.S. oil giant Exxon Mobil Corp. is not allowed to bid in the May energy auction because of its oil deals with the northern self-ruled Kurdish region in Iraq.

The Texas-based Exxon signed six deals with the Kurds last October to search for oil in six areas, bypassing the Baghdad government, which maintains that it must ratify all deals. Some of the deals cover areas located in a land claimed by both Kurds and Arabs.

Deputy head of the Oil Ministry's Licensing and Petroleum Contracts Department, Sabah al-Saidi, told The Associated Press that the reason for the move was Exxon's refusal to abandon its controversial deals with Kurds.

"Exxon has been removed from the list of qualified companies because it refused to abandon the deals with the Kurdish region as requested by the Ministry of Oil," al-Saidi said.

The Kurds and Arab-led government in Baghdad have been at loggerheads over who has the final say in resources development. They have unilaterally signed scores of oil deals, mostly with mid-sized companies which Baghdad considers illegal and has blacklisted the companies involved.

Baghdad recently said that Exxon sent two letters, assuring that it would freeze the deals until the central government and the Kurds resolve their differences. But the Kurds have maintained the deals are still valid and that Exxon is committed to them.

Thursday's announcement came as the Oil Ministry published the final list of 47 oil companies that are qualified to bid in the May 30-31 bidding round for 12 exploration blocs nationwide.

Nearly 70 percent of the blocs on offer hold natural gas blocs and the rest a combination of oil and gas. They are expected to add about 29 trillion cubic feet of natural gas to the current 126.7 trillion cubic feet in reserves, and about 10 billion barrels of oil to the current 143.1 billion barrels of oil.

Since 2008, Iraq has awarded 15 oil and gas deals to international energy companies, the first major investments in the country's energy industry in more than three decades.

Under a previous deal with Baghdad, Exxon and Shell are developing one of Iraq's biggest oil fields, the 8.6 billion-barrel West Qurna Stage 1 field in southern Basra province.

Baghdad aims to raise the daily output to 12 million barrels by 2017 -- a level that would put it nearly on par with Saudi Arabia's current production capacity.

Many analysts say that target is unrealistic, because of the degraded state of the industry's infrastructure after wars and an international embargo that lasted more than a decade.

[Associated Press; By SINAN SALAHEDDIN]

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