Exxon Moving into Seriously Disputed Territory: The Case of Bashiqa

November 17, 2011 at 1:36 pm | Posted in Turkmens | Leave a comment
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Exxon Moving into Seriously Disputed Territory: The Case of Bashiqa

Posted by Reidar Visser on Thursday, 17 November 2011 11:46

Iraq & Gulf Analysis Blog

More details continue to emerge about the recent deals cut by Exxon Mobil with the Kurdistan Regional Government. A key point in this respect is newly-emerged information that at least two of the six exploration blocks are in so-called “disputed territories” that are formally part of the Nineveh governorate but since 2003 have been administered by the Kurds who occupied these areas at the beginning of the war. This includes both the Qush and Bashiqa blocks. In itself, this move by international oil companies into “disputed territory” is not entirely unprecedented in Iraq.

Other companies including Hunt Oil and Gulf Keystone have previously concluded deals for blocks in disputed territory in Nineveh. Once again, it is to some extent of course Exxon’s stature as a “Big Oil” company – and over above that as “American Big Oil” – that is particularly significant as far as the new disputed-territory dimension is concerned.

 It is noteworthy in this respect that previous attempts by the central government in Baghdad to auction off service contracts in disputed territories in Kirkuk failed, both in the first and second licensing rounds in 2009. But there is a particular dimension to the Exxon contract for Bashiqa. It is commonly assumed that pro-Kurdish areas of the Nineveh governorate like Shaykhan and even Tall Kayf (where Qush is situated) may eventually gravitate towards the Kurdistan Regional Government when final status negotiations get going – to some extent as the result of pro-Kurdish feeling among Yazidis and Christian minorities there.

However, in Bashiqa the situation is far from clear. A good study on the disputed territories by Sean Kane of USIP uses elections data at the district level to highlight Bashiqa as an area of Nineveh where Kurdish claims are not particularly popular among the local electorate.

Additionally, to the extent that there is a pro-Kurdish tendency among parts of the population, much of it is actually Christian. As such, it is torn between the idea of joining the KRG and the alternate (and constitutionally dubious) scheme of a Christian-dominated sub-governorate administrative unit in the Nineveh plains.

It is not unlikely that Bashiqa will end up remaining outside the final KRG borders and hence outside its jurisdiction. In other words, in Bashiqa, Exxon is not only going into “disputed territory” but is becoming involved in a particularly disputed area. By so doing, Exxon is positioning itself in direct opposition to the longstanding official US government policy of trying to build trust and détente in these areas through so-called “joint patrols” with Kurdish and central-government participation.

Additionally, this particular move may prove to be yet another thorn in the relationship between Kurds and Sunni Arabs: The Nujayfi family of Mosul and its two leading brothers (Usama, the parliament speaker, and Athil, the governor of Nineveh) have been personally involved in the quest to keep Bashiqa as part of Nineveh. This could in turn have a negative impact on recent tendencies of rapprochement between Sunni Arabs and Kurds as the result of growing interest in federalism among Sunnis, especially in Salahaddin.

 In sum, one cannot help wonder whether Exxon may have been lured into a trap by including such a contentious and risky piece of real estate as Bashiqa in its recent bouquet of exploration blocks. There is now the impression that Exxon has wedded itself to a policy of Kurdish maximalism from which there can be no easy or partial retreat.

The Kurds may well have tried to sell the whole Exxon package as an “all or nothing” deal. As such, it is looking singularly successful.


Baghdad threatens to throw ExxonMobil out after Kurdistan deal

November 12, 2011 at 4:06 pm | Posted in Turkmens | Leave a comment
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Battlelooms between US oil giant and Iraq

Baghdad threatens to throw ExxonMobil out after Kurdistan deal


A high-stakes battle over Iraq’s oil commenced yesterday after Baghdad threatened to throw ExxonMobil, one of America’s most powerful companies, out of the country eight years after the US army toppled Saddam Hussein.

Baghdad was retaliating after the world’s biggest company signed a landmark deal to explore for oil and gas in six blocks of the semi-autonomous Kurdistan region in northern Iraq.

The deal will see Exxon become the first “supermajor” to set up in the region as well as the first oil company to operate in both Iraq and the portion of Kurdistan that is situated inIraq.

Abdul-Mahdy al-Ameedi, director of the Iraqi oil ministry’s contracts and licensing director, said yesterday he had warned Exxon of “dire consequences” last month if it signed these exploration deals with the Kurdistan Regional Government (KRG).

“Exxon Mobil could face disqualification and the termination of its contract with the oil ministry,” to develop the West Qurna field in oil-rich southern Iraq, Mr Ameedi added.

A source at one of the supermajors said: “Baghdad has always said very vociferously that if anybody in Iraq signs a deal with Kurdistan they will get kicked out. We got quite a surprise when we found out that Exxon had gone ahead and done that and it will be interesting to see what happens.”

Yesterday’s threat dented hopes that Baghdad was close to formalising existing contracts in Iraqi Kurdistan as part of a broader agreement on oil revenues across the whole country. The move is likely to further discourage BP and Shell which both have operations in southern Iraq but no plans to move into Kurdistan.

Analysts said that both Exxon and the Iraq government were playing a high-stakes game, as Baghdad attempts to balance the need to grow its own oil industry with the desire to rein in the power of Kurdistan.

Samuel Ciszuk, an oil analyst at IHS Global Insight, said: “This deal is the worst possible headache for the Iraq government.”

Mr Ciszuk added: “Exxon is developing one of the biggest oil projects in the south and is the lead on a huge water injection system that will be used by oil companies across the region. To kick Exxon out would be a very powerful statement because it would be would effectively derail most of its production boosting programme for a good year or two.”

Phil Corbett, at Royal Bank of Scotland, said: “The temptation has become too great for Exxon to resist – in effect Exxon is calling Baghdad’s bluff, presumably believing that it won’t lose its West Qurna project interest with a move into Kurdistan.”

Iraqis presently producing about 2.8 million barrels a day but hopes to boost this to 12 million by 2017 – a level which experts believe to be hugely ambitious, even with Exxon’s contribution.

However, although Iraqis keen to tap the huge revenues that would flow from a surge in oil production, it is wary of Kurdistanmaking too much money from its oil industry because that would increase the region’s power and, in turn, its claim for autonomy, Mr Ciszuk said.

Kurdistanis estimated to hold about 45 billion barrels of oil and up to 200,000 cubic feet of gas and a number of oil explorers – including the latest venture of the former BP chief executive Tony Hayward – have piled in to the region recently.

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