UPDATE 2-Exxon dropped from Iraq bidders over Kurdish deal

Thu Apr 19, 2012 12:22pm EDT

Related Topics

* Exxon not on final list for 4th energy bidding round

* Bidding for 12 blocks set for May 30-31, mostly gas

By Ahmed Rasheed

BAGHDAD, April 19 (Reuters) - U.S. oil major Exxon Mobil did not make the final list of 47 pre-qualified bidders for the next round of Iraq energy exploration rights because it had signed a deal with the semi-autonomous Kurdish north, an Iraq oil official said on Thursday.

Exxon, the world's largest publicly traded energy company, was still on the list in early February but has since been removed, while Syrian General Oil has been added as a pre-qualified bidder, the oil ministry said on its website.

"Exxon Mobil was disqualified from the fourth bidding round because of its contract with the Kurdistan Regional Government," Sabah Abdul-Kadhim, head of the legal section of Iraq's Petroleum Contracts and Licensing Directorate, told Reuters.

"We made it clear to Exxon Mobil from the beginning that they should cancel contracts they signed with Kurdistan, otherwise they would face tough measures from the oil ministry."

Baghdad was infuriated last October when the Kurdistan Regional Government (KRG) announced that Exxon had signed up for six KRG exploration blocks. The central government considers such deals illegal.

Kadhim said any company that signed deals with the KRG would not be allowed to participate in any bidding rounds organised by Iraq's oil ministry.

The KRG and Baghdad have had long-running disputes over political autonomy, oil rights and contested territories, and tensions have risen recently after a clash over oil exports.

Last year Iraq's Oil Ministry excluded U.S.-based Hess Corp from competing in the auction after it had signed deals with the KRG.

Iraq's fourth round of bidding has been repeatedly delayed but is now due to be held May 30-31. It covers 12 new exploration blocks, which are expected to add 29 trillion cubic feet of gas and 10 billion barrels of oil to Iraqi reserves.

Iraq's oil and gas fields have suffered from decades of neglect because of war and economic sanctions.

Iraq improved the terms of the blocks in February after several prospective bidders complained that the deals were unattractive.

The forthcoming auction will focus mainly on gas exploration rights, and the blocks are mostly in remote parts of western and central Iraq, making them riskier investments since the sites are harder to protect against insurgent attacks.

Companies will be able to extract gas discovered in the blocks immediately, but the Iraqi government has retained the option to prevent companies from extracting oil in exchange for paying them compensation.

Exxon could not be reached for immediate comment.

The company has a large and growing portfolio of conventional and unconventional gas assets around the world, many in less challenging environments than Iraq.

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