French oil company Total has bought a 35 percent stake in two exploration blocks in the Kurdistan region of Iraq, risking the wrath of the Iraqi government which has tried to bar companies from dealing directly with the sem--autonomous region.
Total, which is following U.S. rivals into the area, said it bought stakes in the Harir and Safen blocks from U.S. peer Marathon Oil, ignoring an earlier veiled warning from Iraq to refrain from deals with the region in the north of the country without the approval of central government in Baghdad.
“The Baghdad authorities were kept informed of Total’s intentions, a Total spokesman said,” declining to comment further.
Both fields in the Marathon Oil deal are located south of Iraq’s border with Turkey. Seismic exploration on both fields is expected to be completed by September.
The first exploration well on the Harir field was drilled on Monday, and the first exploration well on the Safen field will be drilled next year, Marathon Oil said.
The deal will further strain ties between Baghdad and the autonomous Kurdistan Regional Government (KRG) which are caught up in a long-running political feud over oil rights and disputed territories along their hazy internal border.
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 considers that any oil contracts signed with Kurdistan are illegal 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.
Kurdish officials accuse Shi’ite Prime Minister Nuri al-Maliki of amassing power at the expense of Sunni and Kurdish minorities, but Baghdad says Kurdistan is breaking with the constitution by signing deals it says are illegal with foreign companies.
Increasingly chaffing against Baghdad’s authority, Kurdistan is testing the central government with proposals for a more independent energy policy.
Now one of the most prosperous parts of Iraq, Kurdistan has been isolated from the violence and sectarian strife that still beset the rest of the country.