Reuters reported that Exxon Mobil wants to leave its flagship Iraqi oil project after upsetting Baghdad by signing a deal last year with the autonomous northern Kurdish region which the central government deemed illegal.
The US major was the first company to flex its muscles and challenge Baghdad's authority by signing up for six blocks to explore for oil with the Kurdistan Regional Government in October last year.
Diplomatic sources said that concerns over the likely profit margins on the estimated USD 50 billion West Qurna-1 project could force Exxon to abandon its stake in this southern oilfield. Exxon is telling Baghdad: We are letting you know we're looking to leave. They are shopping around and looking at all the options.
Exxon stock barely budged on the news, indicating there may be more at stake for Iraq, Kurdistan and regional politics than for Exxon shareholders. The oil contracts row is part of a broader battle between the Baghdad government and Kurdistan over oil rights, territory and regional autonomy which is straining Iraq's uneasy federal union.
And Baghdad has been threatening to rip up the West Qurna-1 contract ever since. The oil row is just the latest complication in a long running and deep ranging dispute between Iraq's Shi'ite Prime Minister Mr Nuri al Maliki in Baghdad and Kurdistan's President Mr Masoud Barzani based in its capital, Arbil.
Mr Maliki has gone as far as asking Mr Barack Obama president of US to force Exxon to pull out of the deal, claiming the firm's actions are a threat to peace.
Mr Hussain al Shahristani deputy PM of Iraq met Exxon Mobil executives in Baghdad in the summer and threatened to kick the company out. He declined to say whether Exxon was pulling out, but told Reuters in an email that Baghdad was sticking to its line that all contracts signed with the KRG without the approval of Baghdad were illegal.
He said that "All companies that entered in such contracts were asked to cancel them or pull out. Exxon Mobil can be contacted about their decision."
Source – Reuters
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