Kurds Say Exxon Mobil Committed To Contract With Regional Government

By Pierre Bertrand,

Shutterstock photo

The Kurdistan Regional Government announced Friday that the Exxon Mobil Corp. ( XOM ) told its president this week the oil-and-gas major is committed to a controversial exploration contract that has angered officials of Iraq's national government.

"In a meeting with President Masoud Barzani in Washington DC this week, the CEO of Exxon Mobil, Rex Tillerson, stated that Exxon Mobil will continue its operations in the Kurdistan Region," the Kurdish regional government said in a statement .

Exxon Mobil signed a contract with the Kurdish regional government last November to explore six blocks in Kurdistan, the semiautonomous region in northern Iraq that is frequently at odds with the country's central government.

"Mr. Tillerson said Exxon Mobil is committed to the contracts that it has signed with both the Iraq government and with the Kurdistan Regional Government," the Kurdish regional government said.

Iraq's Oil Minister Abdul Kareem Luaibi said on Monday Exxon Mobil had sent the oil ministry a second letter confirming the company's intention to freeze its deal with the Kurdish regional government, according to Reuters .

On Tuesday, Ashti Hawrami, Kurdistan's oil minister, said Luaibi's comments were "rubbish."

Iraq has the world's fourth-largest proved reserves with 115 billion barrels of oil, according to the U.S. Energy Information Administration . Kurdistan itself has proved reserves of 2 billion barrels of oil.

Exxon Mobil's agreement to develop Kurdish oil has excluded the company from Iraq's next oil lease sale.

Tensions between Kurdistan and Iraq's central government are flaring over exploration rights and payments. Iraq does not consider exploration contracts made outside the central government to be legal.

Earlier in the week, Kurdish authorities halted the export of oil from Kurdistan to Iraq over pending payments to oil companies the regional government claims Iraq has not made.

On Monday, Hussain al-Shahristani, Iraq's deputy prime minster for energy, accused Kurdistan of smuggling oil to Iraq's historical enemy, Iran, and purposely damaging Iraq's finances.

In a speech on Thursday, Kurdish President Barzani said his government has done nothing wrong, and that it can lawfully negotiate its own exploration contracts with foreign oil companies.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Commodities
Referenced Stocks: XOM

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