* Exxon officially informs Baghdad to sell West Qurna stake
* Questions over who replaces Exxon
* Turkish state-run oil firm expelled from project
* Decision will not affect other TPAO projects
By Ahmed Rasheed
BAGHDAD, Nov 7 Exxon Mobil has informed
the Iraqi government it wants to pull out of a $50 billion oil
project, and Baghdad expelled Turkey's state oil operator from
another contract on Wednesday, both signals of trouble in Iraq's
"Exxon has stated in its letter that it has started
discussions with some international oil companies to sell its
stake," Abdul-Mahdy al-Ameedi, director of Iraq's contracts
directorate, told reporters.
The move by Exxon to quit the West Qurna-1 oilfield in south
Iraq will exacerbate tensions between Baghdad and the autonomous
Iraqi Kurdistan region, where Exxon has signed oil deals seen as
more lucrative but dismissed by the central government as
Kurdistan has upset Baghdad by signing oil deals with
foreign companies including Exxon, Chevron and Total
. Kurdish officials say they have the constitutional
right to do so, but the central government says only it controls
Iraq's cabinet also said it was expelling Turkey's
state-owned TPAO from its exploration block 9 oilfield for an
unspecified reason, denying it was prompted by any move by the
Turkish company into Kurdistan.
Baghdad plans to reply to the letter from Exxon by Sunday,
another oil official said. But it was unclear who would replace
Exxon if it leaves the huge oilfield, which pumps around 400,000
barrels per day of crude, with minority partner Royal Dutch
Exxon has not commented publicly on its plans.
Doubts about who can replace Exxon in the important project
could raise questions about Iraq's target to increase crude
output to 5-6 million barrels per day by 2015 from 3.4 million
Some industry sources have said Baghdad is keen to replace
Exxon with companies from Russia or China as a way to hit back
at major Western oil majors. But it was unclear which companies
would have the financial heft to follow Exxon.
Russia's LUKOIL and Gazprom Neft are
already working in Iraq. LUKOIL, which already runs a project to
develop West Qurna-2, has said that it lacks the resources to
take on a project like West Qurna-1 for the moment.
Exxon 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.
Iraq's cabinet also decided to expel Turkey's TPAO from
Block 9, where it holds a 30 percent stake, and asked Kuwait
Energy to boost its stake to 70 percent from 40 percent. Dragon
Oil holds the remaining 30 percent.
"We respect their decision. If they see such a contract
renewal or stake transfer appropriate, we don't mind either,"
Turkish Energy Minister Taner Yildiz told reporters on
Wednesday, in response to Iraq's plan.
Iraqi officials said the decision was not related to possible
TPAO deals with Kurdistan.
"The cabinet rejected the approval of Turkey's TPAO as a
partner," al-Ameedi said. "Removing TPAO has no connection with
Kurdistan deals. We know TPAO has no deals in Kurdistan. But
this decision was taken for other reasons."
He refused to give any further details.
Iraqi oil officials said removing TPAO from the exploration
project will not affect the company's other activities in oil
and gas fields across the country.
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.
"TPAO can still operate in other oil and gas projects in
Iraq without being affected by removal from the exploration
deal," Ameedi told Reuters.
The expulsion comes amid tensions between Baghdad and Ankara
after Turkey accused Iraqi Prime Minister Nuri al-Maliki of
sidelining Sunni Muslims since the onset of a political crisis
in Iraq after U.S. troops left in December.
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.