Iraq says Shell denies oil talks with Kurdistan

Wed Sep 26, 2012 12:50pm EDT

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BAGHDAD, Sept 26 (Reuters) - Iraq said on Wednesday that Royal Dutch Shell has denied starting talks with Iraqi Kurdistan to sign energy deals with the semi-autonomous region.

Sources told Reuters last week that Shell was exploring possibilities in Iraqi Kurdistan, encouraged by the example of rivals who were risking Baghdad's anger by moving into the northern region while developing oilfields in the south.

"We don't have any discussions with the Kurdish regional government about working in the region," Shell's vice-president Hans Nijkamp told Iraq's Deputy Prime Minister for Energy Hussain al-Shahristani, according to a statement from Shahristani's office.

Shell, contacted by Reuters on Wednesday, said it had no comment on the Iraqi government statement.

"Over time, we want to work in all of Iraq, but for the time being we've got three mega-projects on the go (in southern Iraq)," a spokesman said, repeating a statement made last week.

Competitors Exxon Mobil and Total have gone largely unpunished by Baghdad for their northern forays.

According to Shahristani's statement, Nijkamp described as "inaccurate" recent reports that Shell was preparing to follow suit, and said they had originated outside the company.

The reports drew an angry response from the Iraqi government, which early this week threatened Shell with "serious consequences" if it signed any deal with the Kurdistan Regional Government (KRG), two government sources confirmed.

Shell has come close to securing contracts with the region twice before but pulled back so as not to antagonise the central government in Baghdad, which regards all deals signed by the KRG as illegal.

The Anglo-Dutch major is at work in Iraq's supergiant southern oilfields of Majnoon, where it is the operator, and West Qurna-1, where it is Exxon's junior partner. The company is also in a $17 billion gas joint venture with Iraq.

Exxon Mobil became the first oil major to move into the northern region of Iraq in mid-October when it signed a deal with the KRG. Norway's Statoil is also looking closely at KRG exploration deals, industry sources have said.

The Iraqi central government in Baghdad says any oil operations in Kurdistan should be signed with central government and it blacklisted Chevron Corp, which followed Exxon into Kurdistan this month, over such a deal.

Autonomous since 1991, Kurdistan has its own government and armed forces, but still relies on the central government for its budget drawn from the OPEC nation's oil revenues.

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