By Isabel Coles
ARBIL, Iraq Nov 8 A new Turkish oil company is in negotiations to acquire several blocks in Iraqi Kurdistan in a joint venture with at least one foreign oil major and the Kurdistan Regional Government, industry sources said on Thursday.
If successful, talks by the unnamed Turkish entity would be another victory for autonomous Iraqi Kurdistan after it signed deals with oil majors like Exxon Mobil and Total , defying the central government in Baghdad which says only it has the right to sign contracts for Iraq's oil resources.
"It has been in the works since the start of the year," said one industry source with knowledge of the talks.
Kurdistan says its right to sign oil deals is enshrined in the constitution. But Baghdad says those agreements are illegal and has warned companies they will be blacklisted from Iraq oil opportunities if they sign accords with Kurdistan.
Oil majors see better terms, security and an easier working environment in Kurdistan compared to tougher service contracts and difficulties with red tape, bureaucracy, and infrastructure bottlenecks that hit oil projects In the rest of Iraq.
An adviser to the Kurdistan Regional Government's oil minister declined comment.
While the name of the new Turkish entity was not immediately clear, one source described it as "state-owned" or a "state-sponsored" private entity that is negotiating to join Exxon Mobil's blocks in Kurdistan.
Turkey's state-owned TPAO oil company operates in southern Iraq but does not have any official operations in Kurdistan.
News of the talks came a day after Iraq said Exxon had informed Baghdad of its intention to leave a huge oilfield in the south and officials announced a cabinet decision to reject TPAO as a partner in another oil project.
Iraqi officials said the Turkish decision was not linked to any move by TPAO into the Kurdish region. But one Turkish source said the move appeared political as tensions are high between Baghdad and Ankara.
TPAO has minority stakes in the two small oilfields of Badra and Maysan in the south and is running two gas fields along with Kuwait Energy in the province of Diyala and the southern oil hub of Basra, both near Iraq's borders with Iran.
The expulsion of TPAO comes amid squabbling between Baghdad and Ankara after Turkey accused Iraqi Prime Minister Nuri al-Maliki of sidelining Sunni Muslims in Iraq since the onset of a political crisis after U.S. troops left in December last year.
Maliki, a Shi'ite close to Iran, has traded insults with Turkey's Prime Minister Tayyip Erdogan several times, with the Iraqi leader calling Turkey a hostile state and Erdogan accusing Maliki of fanning sectarian tensions.
Exxon was the first major to sign up with Kurdistan and is now at the heart of a long-running dispute over oil reserves and territory between the Arab-led central government and ethnic Kurds, who have run their own regional administration in northern Iraq since 1991.