April 25, 2024

Iraq Criticizes Exxon Mobil Over Kurdistan

The statement from the official, Hussein al-Shahristani, said the central government had cautioned Exxon against pursuing oil deals in Kurdistan, which the government says will remain illegal until long-awaited rules can be worked out to split revenues among Iraq’s fractious regions.

Mr. Shahristani’s office issued the statement a day after The Financial Times reported that Exxon, based in Irving, Tex., and the United States’ largest petroleum company, had become the first major international oil operator to sign a contract in the Kurdistan region — a move the company has neither confirmed nor denied.

If Exxon did indeed sign a deal in Kurdistan, it is wading into a central controversy that has dogged Iraq since the American invasion.

Oil has long been the heart of Iraq’s wealth, and the invasion threw control of the rich reserves into question, exacerbating longstanding enmity between the Kurds and other Iraqis. Under President George W. Bush, the passage of an oil law to split revenues was considered a crucial benchmark to bring long-term peace to Iraq.

Many smaller oil companies, including American ones like Marathon and Hunt of Texas, have signed contracts with the Kurdistan Regional Government. But the larger companies had held back to ensure they retain deals for fields in the south.

Michael Klare, a professor at Hampshire College and an authority on the Iraqi oil industry, speculated that Exxon might be betting that Iraq would not make good on threats of punishment, recognizing that the company’s investment elsewhere in the country was crucial to its economic revival.

“Both Exxon and the Iraqis understand that Iraq has no hope of reaching its lofty goals of higher oil output without Exxon’s involvement,” Professor Klare said. “Threats to punish the company for investing in the Kurdish area are hollow.”

Critics of the oil companies that went to Kurdistan after the overthrow of Saddam Hussein’s government say they are pursuing development in a manner that, far from contributing to stability through economic growth, has heightened ethnic tensions between Arabs and Kurds.

Exxon’s spokesman, Alan T. Jeffers, said Saturday in an e-mail that the company would not comment on whether it had signed an oil deal in Kurdistan, or respond to the Iraqi deputy prime minister’s statement. The Kurdistan Regional Government also had no immediate statement, though its official Web site prominently posted, without clarification, the text of The Financial Times article.

For now at least, the Iraqi government appears to be taking a strong, but somewhat vague, stance. “The Iraqi government will deal with any company that violates the law the same way it dealt with similar companies before,” the deputy prime minister’s statement Saturday said.

In the past, the government has excluded oil companies active in Kurdistan from new auctions elsewhere in Iraq. It was unclear whether the statement implied any threat to revoke Exxon’s existing contracts, which would be significant. A spokesman for Mr. Shahristani declined to elaborate.

The actual legal argument against any deal remains a matter of controversy. Iraq’s Constitution allows regions to strike their own oil deals, but the central government says there is no current law spelling out how that can happen.

Beyond the ripples that oil deals send through Iraq’s fragile politics, they are important for bringing new oil to world markets — but only if the relations between companies and the government go smoothly enough to allow investment.

The State Department and the military have sought to tamp down antagonism between Kurdistan and the central government for years, and American troops have died trying to keep the peace along that internal border.

With the American withdrawal imminent, concerns are mounting that ethnic tensions could again threaten stability.

Under a 2009 contract, Exxon is leading a consortium developing one of Iraq’s largest oil fields, outside Basra near the Persian Gulf.

Exxon and its partners agreed to invest $50 billion over seven years to increase output by about two million barrels of oil per day there, at West Qurna Phase 1, bringing more new oil to market than the United States currently produces in the Gulf of Mexico. Margins, though, are low. Kurdistan offers more lucrative production-sharing agreements, allowing the company to earn a larger share of revenues and to count more of the crude on its books, which helps boost stock prices.

Article source: http://feeds.nytimes.com/click.phdo?i=d6354f3c81b19a1e2ee0fadd857df458

DealBook: Hayward’s Vallares to Buy Iraqi Oil Company in $2.1 Billion Deal

Tony Hayward, a former chief of BP, is set to become the head of Genel Energy.Sergei Karpukhin/ReutersTony Hayward, a former chief of BP, is set to become the head of Genel Energy.

LONDON — Tony Hayward, who resigned as chief executive of BP amid the fallout from the Gulf of Mexico accident last year, is set to become the head of another oil company.

Vallares, the investment vehicle Mr. Hayward co-founded with the financier Nathaniel P. Rothschild earlier this year, agreed on Wednesday to buy Genel Energy International, an oil producer in the Kurdistan region of Iraq, in a $2.1 billion deal.

Mr. Hayward will be chief executive of the new company, called Genel Energy. Rodney Chase, the former deputy chief executive of BP, would become chairman and Mr. Rothschild nonexecutive director.

Under the terms of the transaction, Vallares will issue $2.1 billion of new stock at £10 a share to acquire Genel in a reverse takeover. The owners of Vallares and Genel will own equal shares in the combined company.

The deal comes months after Vallares raised £1.35 billion ($2.0 billion) from investors through a London stock listing in June, with the expectation of buying oil and natural gas assets in Russia and the former Soviet states, the Middle East, Africa, Asia and Latin America.

Jalal Talabani, Iraq's president, with cane, shakes hands with executives from Genel Energy in 2009 to celebrate the start of oil exporting in Kurdistan.Safin Hamed/European Pressphoto AgencyJalal Talabani, Iraq’s president, with cane, shakes hands with executives from Genel Energy in 2009 to celebrate the start of oil exporting in Kurdistan.

Genel has stakes in two producing oil fields, a major natural gas condensate discovery and significant exploration acreage in Kurdistan, the semiautonomous northern province of Iraq, Vallares said.

“Our investors are acquiring a strong existing business with excellent producing assets, a fine team of technical and operating staff already in place, and immense potential for future growth,” Mr. Hayward said in a statement on Wednesday. “The Kurdistan region of Iraq is undoubtedly one of the last great oil and gas frontiers.”

Mehmet Sepil, currently chief executive of Genel, is slated to become president of the new company. Mr. Sepil was embroiled in a market abuse case and was fined £967,000 by the British financial regulator, the Financial Services Authority, in February in relation to his investment in Heritage Oil.

The newly combined entity plans to file a prospectus in October, allowing it to move forward with its listing in London. The deal is subject to the approval of the Kurdistan government, which the company expects to receive later this month.

Following the transaction, the company plans to have sufficient funds “to participate aggressively in the significant consolidation we expect to see in the region over the next few years and to expand elsewhere if good opportunities arise,” it said in the statement.

Article source: http://feeds.nytimes.com/click.phdo?i=d50b33f395775113277405b88dda0fa1