France’s largest oil producer Total followed Exxon Mobil Corp. and Chevron Corp. into
France’s largest oil producer Total followed Exxon Mobil Corp. and Chevron Corp. into the Kurdistan region.
The deal will certainly further strain ties between Baghdad and the Kurdistan Regional Government (KRG) which are caught up in a long-running political feud over oil rights and disputed territories along their hazy internal border.
Total, which is following U.S. rivals into the area, said it bought a 35 percent stake in the Harir and Safen exploration blocks from U.S. peer Marathon Oil, ignoring an earlier veiled warning from Iraq to refrain from deals with the region without the approval of central government in Baghdad.
"The Baghdad authorities were kept informed of Total's intentions, a Total spokesman said," declining to comment further.
Both fields in the Marathon Oil deal are located south of Iraq's border with Turkey. Seismic exploration on both fields is expected to be completed by September.
The two blocks cover an area of 705 square kilometers (270 square miles) and 424 square kilometers respectively. Total will be the operator of the Safen block, the Paris-based company said.
The Kurdish region plans to increase output to 2 million barrels a day by 2019, Michael Howard, an adviser to Kurdistan Natural Resources Minister Ashti Hawrami, said in a June 10 phone interview. It has signed energy agreements with about 50 companies and plans to increase output to 1 million barrels a day by 2015 from about 300,000 barrels a day now, he said.
Kurdish authorities recognize production-sharing agreements, which give investors a share of any oil they may produce, whereas Iraq’s Oil Ministry offers only fee-based service contracts.
Iraq’s Arab-led central government in Baghdad does not approve of energy companies signing deals with the Kurds to explore for oil in their self-rule region. Baghdad wants to manage its energy resources nationwide, but the Kurds say the constitution does not require them to go through Baghdad.