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Iraq tells Exxon to choose: Southern Iraq or Kurdistan

By Reuters - Jan 27,2013 - Last updated at Jan 27,2013

BAGHDAD — Iraq has told ExxonMobil it must choose between working in its southern oil fields or in Kurdistan, and Baghdad expects the US oil major to make a final decision in a few days, its oil minister said on Sunday.

“We made it clear to Exxon in the last meeting that the answer we expected from them is either to work in the Kurdistan region or to work in southern Iraq,” Oil Minister Abdul Kareem Luaibi told reporters.

“ExxonMobil cannot work in both fields at the same time.”

Exxon was the first major oil company to sign agreements with the government of the autonomous Kurdistan region in the north, a move that increased tensions between Baghdad and the Kurds in a long-running dispute over oil, territory and political autonomy.

Baghdad says any deals signed with Kurdistan are illegal, but the government of Kurdistan says the constitution allows it to sign oil agreements without permission from the central government.

Exxon’s chief executive met with Iraqi Prime Minister Nouri Al Maliki and with Kurdistan’s president last week to discuss operations in both, while industry sources said the US oil major was mulling an offer from Baghdad.

Iraqi officials said at the time that Exxon was moving in the right direction in its policy, but Kurdistan also said the company remained committed to its Kurdish deals.

The feud between Baghdad and the Kurdistan enclave, which has run its own regional administration and armed forces since 1991, has escalated since the KRG began signing deals with oil majors such as Exxon and Chevron.

These deals have also prompted the central government to warn companies they risk losing their assets in the southern part of the country.

“Other oil companies that signed deals in Kurdistan region should face the same scenario, and we have informed them,” Luaibi said.

The minister spoke at the signing of a final exploration and development contract with a Kuwait Energy-led group, part of Iraq’s drive to attract more foreign investment to upgrade its oil and gas sector.

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