January 24, 2013

Iraqi Kurdistan Awards Chevron Stake In Oil Block

(Reuters) -- Iraqi Kurdistan has awarded Chevron Corporation a stake in the Qara Dagh oil block, the region's energy minister said on Thursday, building on the company's exploration play in the autonomous northern region.

Kurdistan has upset the central government by signing deals directly with oil majors such as Chevron and Exxon Mobil Corporation, providing lucrative production-sharing contracts and better operating conditions than in the south.

Baghdad says it alone has the right to do oilfield deals and to control exports of the OPEC member's crude.

"We informed them that we awarded them a field called Qara Dagh,"Ashti Hawrami told Reuters. "It is an important and big exploration project. We've agreed on all the terms."

Hawrami said Chevron was firmly committed to all its projects with the Kurdistan Regional Government (KRG). Jay Pryor, Chevron's vice-president for business development, met with Kurdistan PresidentMasoud Barzani at the World Economic Forum in Davos.

"During the meeting, Chevron expressed strong commitment to all its projects in Kurdistan," Hawrami said.

Unlike its larger rival Exxon, Chevron has no stake in oilfield projects in southern Iraq. Even so, Baghdad hit out at Chevron last summer -- barring it from any oil agreements with the central government.

The company found the commercial terms of Iraq's service contract unworkable, but -- like other investors -- found Kurdistan's production-sharing contracts more attractive.

Slim margins at its $50 billion West Qurna-1 oilfield project in southern Iraq had led ExxonMobil to seek to quit the service contract and focus firmly on Kurdistan.

But Exxon may be moving closer to Baghdad's side in its bitter feud with Kurdistan -- with a sweeter deal to keep it operating in southern Iraq on the table, said industry sources.