Gulf News cited Mr Nouri Al Maliki PM of Iraq as saying that Baghdad wouldn't terminate ExxonMobil Corporation's contract to develop the West Qurna-1 oil field in southern Iraq as punishment for signing a deal with the country's semi-autonomous Kurdistan region with whom Baghdad has a long-running dispute over land and the sharing of oil resources.

Mr Al Maliki said that "We haven't cancelled its contract in the south. We are looking for a way for its ExxonMobil's other contracts in any area to be within the legal contexts but as for cancelling its contract in the south, no."

He said that Exxon has frozen its controversial contract with the KRG which was announced in November, and suggested that his government was willing to find a way to ultimately make the deal work if negotiations were restarted with the involvement of the Ministry of Oil.

Mr Al Maliki said that it has a legal violation, it doesn't work unless Exxon comes back and negotiates with the Ministry of Oil in the presence of a representative of the Kurdistan region, then possible. Even Exxon I think has frozen the project, now the contract is frozen and we will try to find a formula to remedy it.”

Exxon is currently producing 370,000 barrels per day at West Qurna-1 under a central government service contract. The government had warned the company that it could lose its contract to develop the field which has proven reserves of about 8.7 billion barrels for signing the deal for six exploration blocks in the north with the Kurdistan Regional Government or KRG.

Some of those blocks are in a hotly contested oil rich territory claimed by both the KRG and the central government, stretching from the Iranian border to the east to the Syrian border in the northwest. An ExxonMobil media officer in the US declined to comment. So far the company has said nothing about the deal.

The KRG and the Baghdad government are at loggerheads over scores of oil deals that the KRG signed with international oil companies. Baghdad has said they are nul and void because they need approval by the central government, while the Kurds say they are in line with the country's new constitution.

(Sourced from Gulf News)