AFP – French energy giant Total must end its dealings with the autonomous Kurdish region in northern Iraq or sell its stake in a major southern oilfield, Iraq’s top energy official told AFP on Sunday.
Total “was requested to withdraw from this field, and it has been given a certain period to end this case by selling its share to another company or by ending the contract with Kurdistan,” said Hussein al-Shahristani, the deputy premier responsible for energy affairs.
He did not specify the time by which Total needed to make a decision.
Kurdish authorities have signed dozens of deals with foreign energy firms on a production-sharing basis, contracts regarded as illegal by Baghdad which insists all such deals must go through the federal oil ministry and prefers per-barrel service fees.
Total said on July 31 that it had signed an oil exploration deal with the Kurdish region, putting it on a collision course with the central government.
The agreement came at a time when relations between the autonomous region and Baghdad have reached a low ebb over multiple festering disputes, including over oil contracts and territorial claims.
“Total announced that it signed contracts in Kurdistan and, because of that, the ministry of oil told them that they had breached Iraqi law,” Shahristani said. “If it ends its contract with Kurdistan, it can proceed with the Halfaya field.”
Total is a minority member of a consortium led by China’s CNPC and also including Malaysia’s Petronas to extract oil from the Halfaya field in Maysan province, in a contract awarded in a December 2009 auction.
The field, which has known reserves of 4.1 billion barrels of oil, officially began pumping last month, and is set to produce 535,000 barrels of oil per day within five years.
CNPC has the biggest stake in the consortium at 37.5 percent, followed by Petronas and Total at 18.75 percent each, with Iraq’s state-owned South Oil Company holding a 25 percent stake.