UPDATE 1-Kurds say Exxon still working in N. Iraq

Sat Mar 17, 2012 8:36am EDT

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By Shamal Aqrawi

ARBIL, Iraq, March 17 (Reuters) - Exxon Mobil has not suspended its work in Iraq's autonomous Kurdish region, an aide to the region's president said on Saturday, after Baghdad said Exxon had frozen its Kurdish deal.

Iraq's oil minister said on Friday that Exxon had written to Baghdad informing it that it had suspended work in the Kurdish region, under a deal which Baghdad considers illegal.

"We've never heard anything like this from Exxon Mobil. We have continuous meetings with Exxon Mobil's senior executives and I think the company is continuing its work," said Fuad Hussein, senior aide to Kurdish President Masoud Barzani.

Exxon is one of the oil majors that is participating in massive projects intended to make Iraq the world's biggest source of new oil over the next few years, but the U.S. firm's decision to sign a deal with the Kurds has infuriated Baghdad.

Iraq has threatened to block Exxon from bidding in future oil projects and even to reconsider its role in a supergiant field, West Qurna-2, where Exxon was part of a consortium that won a contract in 2009.

Baghdad has offered international oil firms fee-for-service contracts, while the Kurdish region offers production-sharing deals which give the foreign firms a share of oil output - considered far more lucrative.

Because the legality of Kurdish deals is in dispute, only smaller firms had made agreements with the autonomous region until last November, when the Kurds announced that Exxon had signed a deal for six exploration blocks.

Iraq's Oil Minister Abdul Kareem Luaibi said on Friday that Baghdad had received a letter from Exxon on March 5 "saying they are freezing the contract with the Kurds".

Exxon declined to comment on Luaibi's remarks on Friday.

Luaibi said Iraq had not yet reversed a decision to bar Exxon from bidding in the next round of oil deals, and Baghdad was waiting for Exxon to further clarify its position.

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