US giant ExxonMobil is to be banned from participating in Iraq’s latest round of bidding (scheduled to be held in May) as a penalty for making deals with the country’s semi-autonomous Kurdistan region. The move is seen as an attempt by the Iraqi central government to assert its authority over deals made within its borders.
As a policy, the Iraqi government considers invalid any arrangements made with the Kurdistan Regional Government (KRG). The KRG, however, insists that all the deals it has made comply fully with Iraq’s new constitution.
The upcoming auction is to cover 12 exploration blocks, 7 of which are believed to contain natural gas and the other 5 of which are believed to contain crude oil reserves.
Results from the new round of bidding are predicted to add 10 billion bbls of crude oil and 29 trillion ft3 of natural gas to the nations reserves. The auction has, however, already been delayed twice over disagreements regarding the nature of the contracts available. The Iraqi government wants to supply fixed-fee service contracts, but the majority of explorers are seeking production-sharing agreements.
The Iraqi government has decided to stand its ground and has refused to allow any production sharing contracts, which would allow the explorers to actually own some of the oil in reserves.
Disputes continue over whether or not the Iraqi government has the legal powers required to blacklist foreign companies from operating in southern Iraq after making deals with the KRG.