Iraq Says Exxon Freezes Kurdistan Oil Deal

Senior Iraqi government officials said Friday that Exxon Mobil Corp. has told Iraq's central government that it has frozen an exploration contract with the nation's Kurdistan region, a deal Baghdad strongly opposes.

"We have received a letter from Exxon in which it stated it freezes its oil contract with Kurdistan," the government official said.

"Although we would prefer Exxon to cancel its deal with Kurdistan, freezing the contract is a step forward," another official from the Iraqi oil ministry said.

Exxon, based in Irving, Texas, wouldn't comment Friday. Last week, Exxon CEO Rex Tillerson said his company remains committed to working in both Kurdistan and southern Iraq.

The semiautonimous Kurdistan Regional Government in northern Iraq is embroiled in a long and often contentious dispute with Iraq's central government over the right to issue oil-exploration licenses in the region.

Baghdad has essentially asked the U.S. oil giant to choose between its deal with the KRG and its contract with the central government to develop the 370,000 barrels-a-day West Qurna Phase 1 field in southern Iraq. The impasse has also led Exxon to be barred from Iraq's fourth oil-and-gas licensing auction, scheduled for May.

The first Iraqi official said Exxon stated it has frozen its contract with the KRG until a new national oil-and-gas law is enacted. A new version of the law was introduced last year but it has been stalled in Parliament.

Exxon is already producing around 370,000 barrels a day of oil from the West Qurna field under a service contract with the Baghdad government. Many other large oil companies, including BP PLC, Royal Dutch Shell PLC, Eni SpA and Lukoil Holdings have similar contracts.

The KRG has signed nearly 50 oil and gas deals with international oil companies, mostly second-tier or wildcat explorers. The KRG hoped Exxon's presence would lead to other oil majors beginning operations in the region.

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