"> Kurd, Baghdad oil officials meet on Exxon spat

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November 18, 2011

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Kurd, Baghdad oil officials meet on Exxon spat

Reuters

The most senior energy officials from the Kurdish region of Iraq and from the central government were due to meet on Thursday to try and resolve a spat over a major oil deal involving U.S. oil major Exxon Mobil .

Kurdish Regional Government Natural Resources Minister Ashti Hawrami and Iraqi Deputy Prime Minister with responsibility for energy, Hussain al-Shahristani, were due to meet at the sidelines of a conference in Turkey, a source familiar with the matter said.

The two sides have been at loggerheads since the Kurds announced last week that Exxon had signed a deal to explore in the region.

Baghdad, which considers such contracts illegal, threatened to cancel Exxon's licences in the south of the country in response.

Shahristani declined to take questions from reporters in Istanbul, and the semi-autonomous Kurdish government also declined comment.

However, a Kurdish representative in the central government said he expected a solution to the impasse.

"I don't believe that the central government of Iraq will cancel any signed contracts or contracts that are already in place, and particularly a contract with Exxon Mobil," Deputy Prime Minister Ross Nouri Shawis told Reuters in an interview in London.

"Generally, there is a majority who wants to resolve this problem, but of course there are other anti views, and this is normal with any topic."

In recent years, Shahristani has been one of the most vocal critics of Kurdistan issuing licences to oil companies.

Exxon has not commented on the deal or on the threat of cancelling its contract to develop Iraq's 8.7-billion-barrel West Qurna Phase One oilfield in the south.

Royal Dutch Shell Plc had also held talks with the Kurds about potential investments over the past year, several officials and oil executives said.

Two sources said the Anglo-Dutch oil giant had been in talks to join Exxon in the contracts it signed but pulled out in October.

However, sources familiar with the companies' thinking said Shell remained interested in investing in Kurdistan.

Had Shell signed the deal to invest in Kurdistan, it could have derailed a $17 billion gas deal with the Iraqi government that cleared its last major hurdle on Tuesday after it was approved by Baghdad's council of ministries.

The Kurds argue that the Iraqi constitution allows them to sign oil contracts and say Shahristani's objection to the deals reflects opposition to Kurdish autonomy.

Some in Baghdad argue that a decentralised system of oil licensing could be chaotic and lead to a lack of transparency over revenues.

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